With Cook's exit, AI will be biggest challenge for new Apple CEO Ternus

Apple's leadership shift to John Ternus comes at a critical moment as the company races to catch up in AI and defend its dominance in a rapidly evolving tech landscape

The succession plan at Apple, which sees Tim Cook moving upstairs as executive chairman while John Ternus takes over as chief executive officer (CEO), has been in the works for a while. Mr Cook will continue to run the consumer electronics giant till September to ensure Mr Ternus, an engineer who currently heads hardware development, eases smoothly into the new role. Mr Cook took over from the iconic Steve Jobs in September 2011 and, by any metric, his 15-year stint has been wildly successful. Apple had a market valuation of about $400 billion in 2011 and it is now worth over $4 trillion. There are more than 2.5 billion active Apple devices in the world, and the company is a market leader in high-end products. It also has a devoted fan base. But given the space Apple occupies in the digital ecosystem and the rapid pace of change in that environment, the new CEO cannot simply build upon the foundations established by his predecessor. Mr Ternus will have to fight to create more space for Apple in the new, highly contested territory of artificial intelligence (AI).

 

Most of the world’s digital giants focus on either hardware, as in the case of Nvidia, or software, and social media. All of them are trying to exploit AI and leverage it to create new offers, and open new revenue streams. Apple is unusual in that it offers products that seamlessly integrate hardware and software to build user-friendly, top-tier experiences for the user. Moreover, the iPhone user can transfer work flows to the Mac and store everything securely on the iCloud. Apple could reasonably be described as a consumer-electronics giant rather than a digital player. But there have been murmurs for the past two years that Apple has fallen behind in terms of inducting AI and packaging it in ways that make it user-friendly. Siri (virtual assistant) appears to be less innovative and less AI-enabled than its android rivals, and Apple Intelligence has not been adopted with the same enthusiasm as Grok, Claude, and ChatGPT. When it comes to AI, Apple is not the leader, and falling behind in this new race could lead to a sharp erosion of market share. It is up to Mr Ternus to ensure that does not happen.

 

As a hardcore engineer who has been a key player in developing Apple chips and ensuring every Apple device “talks” to everything else, Mr Ternus seems to be well placed to understand and induct the new technologies. But the time to market is critically short. It may take too long to develop AI skills and in-house capacity that go beyond what Apple Intelligence currently has. To stay relevant, Apple must offer an experience that is comparable to what’s available off the shelf. And ideally, Apple has to go beyond that. It is likely, therefore, that Mr Ternus will also have to build new alliances. Apple has reportedly been talking to OpenAI, for instance. It has also been rumoured that Apple may be looking to acquire Perplexity. That would be a mega billion deal but Apple could easily afford it. Acquisition could be the way to go, whether it’s Perplexity or other players in critical AI-related domains. As an engineer who has usually been a backroom boy rather than fronting negotiations, Mr Ternus may have to quickly acquire new skills in the art of the deal. This might perhaps be the biggest challenge he faces on the personal front as he takes charge.