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00:00John Ternus, it's not a name that a lot of people outside of the immediate Apple ecosystem were super familiar
00:06with a couple years ago, but he's been at Apple for 25 years.
00:10Why is he in the position, in your view, to be the heir apparent to Tim Cook?
00:15There are a few main reasons. One, and this is an interesting one, he's 50 years old, which makes him
00:2215 years younger than Tim Cook,
00:24and at least 10 years younger than the rest of Apple's executive team, people who would be in position to
00:30take the CEO role.
00:32Tim Cook is not going anywhere imminently, right? I still think it's going to be at least another year to
00:38go before he's no longer CEO,
00:41maybe two to five years, who knows at this point, right? I mean, everything in his world is Apple, so
00:46it's a hard position to move on from.
00:49And that means that the rest of the executives who could take over are going to be even older.
00:54And so you need someone in the role who could take over and be in that position for 10 to
00:5920 years.
01:00And that really leaves you only with John Ternus. Aside from that, he's the only person on the executive team
01:07who has successfully launched hardware, software, integrated products.
01:12He is essentially in charge of their products, which generate 80% of revenue for the company.
01:18He's known for his political acumen. He's known for empowering leaders under him at Apple.
01:24He's known for getting into the weeds on the technical side.
01:28He would be a different type of CEO for Apple, right?
01:32Steve Jobs was an innovator, a designer, a product genius, really a visionary.
01:38Tim Cook was a visionary when it came to operations and sales and finances.
01:46And Ternus, in his own right, is a maestro of engineering, solving hard problems, bringing devices to market, drumming up
01:54new products.
01:55So that's going to be a different type of CEO.
01:58But I still think it would be a continuity pick in the sense that he's worked under Tim for a
02:03very long time, well north of a decade.
02:06He's been a senior VP at Apple for about five years at this point.
02:11And he's someone Apple has been pushing to the forefront in its marketing, in its keynotes, meetings with government regulators,
02:19meetings with press local in different jurisdictions around the world, different Apple campuses and offices globally.
02:27So this is someone who's at the forefront of the CEO race at Apple right now.
02:31You know, Mark, so much here at Bloomberg, what we'll talk about when we're going through a different economic or
02:35market cycle,
02:36is that, you know, when it comes to like a Fed chair, we need like the right Fed chairman for
02:41the era.
02:42Like I think about during the great financial crisis, during COVID and just so on and so forth.
02:46I go all the way back to Volcker when we were dealing with inflation.
02:49What is it?
02:50Because you talk about the youth or being younger, Ternus.
02:54You talk about continuity, being an insider.
02:57I mean, is that what really Apple needs?
03:01I mean, what does it really need?
03:02It's not what Apple needs right now.
03:04Apple needs a shakeup.
03:05Apple needs someone who's more AI-centric and the board knows this.
03:08And, you know, in the conversations they're having within the board, the question is, do we really want the continuity
03:13pick?
03:14Or do we want sort of someone who's an outlier or an outsider who could shake things up on the
03:20AI side?
03:20And, you know, what you keep coming back to is the fact that Apple is a hardware-centric company.
03:25They're a hardware platform that all these AI and other services run on top of.
03:29And you can't really run the AI unless you have the hardware there at the forefront, right?
03:33And so the hardware picture, at least for now, it does work.
03:36But let's see if someone else emerges in the next few years.
03:39I don't think that's going to happen.
03:41Apple is such a unique culture and a unique company that you really can't bring in an outsider.
03:46So all signs point to Ternus.
03:49Well, on Ternus' track record, Mark, one thing that surprised me, and I kind of let out this audible yelp
03:55in the newsroom when I got to this part of your story, was the missteps that he's had have been
04:01very prominent.
04:02I mean, two things that Apple moved away from that were widely seen as mistakes happened under Ternus' tenure.
04:10Talk about the keyboard, the butterfly keyboard issue, and the touch bar.
04:13Yeah, he's not had a good run in the mid-2010s with keyboard-related items.
04:18You had the butterfly keyboard, which was a disaster and kept breaking for typing.
04:23You had the touch bar.
04:24Now, the thing I'll say about the touch bar and the butterfly keyboard, he was the engineering implementer of these
04:29ideas.
04:30These were two things that were pushed heavily by the design team at Apple at the time, and so he
04:36was really executing on the vision that they pushed him to execute on.
04:41The design team at Apple is in a different era.
04:43They are in lockstep now with the engineering team run by John Ternus because he also oversees the design teams
04:49now, both hardware and software.
04:51So I think that it's a bit of a different situation right now.
04:54Since he became senior VP, Apple's products have improved dramatically in terms of quality and features.
05:00I mean, you see the MacBook Airs and the MacBook Pros and the iPhones these days.
05:04The durability is just insane.
05:06So I do think that, you know, that was 10 years ago.
05:09Those are notable missteps under his watch when he was running Mac hardware engineering, but certainly there's been a lot
05:15of improvement since that time.
05:17So, you know, I want to go back to how you started.
05:19You said, Tim Cook, it could be next year.
05:21It could be two to five years.
05:22I mean, if it's longer, it actually gives, you know, Cook some more time to kind of figure out and
05:27maybe also continue to kind of guide the strategy of the company.
05:30I mean, a lot can happen, you know, in two, three, four, five years.
05:35So I'm just wondering how much is, you know, Ternus a sure thing?
05:41Well, the longer that Tim Cook is CEO, the odds go up that Ternus is a sure thing because everyone
05:48else around Tim Cook on the executive team is just going to get older and older.
05:53You know, and so that is going to leave Ternus.
05:56Like if Tim Cook steps down in five years, Ternus will be 55, still giving him 15, you know, years
06:02potentially in the CEO seat, maybe longer than that.
06:06Everyone else will have aged out.
06:08I mean, you have Eddie Q who runs services.
06:10He's pushing over 60.
06:12Greg Josuek runs marketing over 60.
06:14You have software engineering chief, Craig Federighi, who's in his late 50s and has already declared publicly that he shouldn't
06:21and does not want to be CEO of Apple.
06:24You have a new CFO who's relatively young around Ternus's age, but Apple's not going to make a CFO.
06:30They're CEO.
06:32You have a new COO who's about 60.
06:35And at this point, he's going to be too old to become a CEO as well.
06:41And so all of your options are gone.
06:44You had people talk about Jeff Williams for many years.
06:47He was the COO.
06:48They had been putting him in the driver's seat as a successor by giving him more product and design responsibility.
06:53But he retired at the end of last year, so he's no longer an option.
06:56There was all sorts of speculation about Angela Aarons.
06:58You know, six years ago when she was running retail, she's out of the company as of 2019, so she's
07:04no longer an option.
07:05So basically, you're out of options unless Apple's going to go external, which would be a massive shock.
07:12Well, that's what I was going to ask you.
07:14What's the chance that they go external or what's the chance that they bring back somebody who left but who
07:19also knows the culture?
07:20Apple has a remarkably bad track record bringing in executives from the outside.
07:27Nearly everyone who they've brought in has been a failure from an outsider's perspective.
07:33They had their chief people officer, Carol Surface, who was out in two years.
07:37I mentioned Angela Aarons, the retail chief.
07:39She was out in five years.
07:41There's some other examples there as well.
07:44But it has not worked out pretty for them from an Apple cultural standpoint.
07:48And John Ternus, having been there for 25 years, makes it a lot simpler for him to be in the
07:53role.
07:54Lots of people at Apple.
07:55Oh, the other example I should give, by the way, is John Gianandrea, who was the AI chief.
07:59He came from Google, and that was a complete disaster, right?
08:01So the track record on outsiders has been extremely poor, to say the least.
08:07Apple's run like a family business, right?
08:10For keeping it in the family.
08:12It's run by the family, the same people who've been around for a very long time.
08:15And so they're going to pass it on to the next member of the family, I think.
08:19Mark, we don't want to give the entire story away.
08:21It is one of the most read stories on the Bloomberg Terminal.
08:23It is today's big take.
08:24Everybody should check it out.
08:25It's not all you have on the terminal today.
08:27A couple other stories we wanted to highlight a scoop from you about adding search advertising to Apple Maps in
08:35a push to make services even bigger.
08:37What is Apple planning on doing to our maps?
08:40Yeah, similar to Google and Yelp, restaurants, brands, stores will be able to bid on search queries.
08:47So, for example, a coffee shop in your area wants to bid on the term coffee.
08:52Probably that will cost them a lot of money.
08:54But if they're the highest bidder and you search coffee in their locale, they'll pop up first as an ad
09:00on the search results.
09:01And that's an ad.
09:03So, big advertising expansion for Apple.
09:06Obviously, Apple Maps is extraordinarily visible.
09:08They've been pushing ads for years now in the App Store, search ads included.
09:12They've been pushing advertising within the Apple News app and the news section in the stocks application.
09:18So, definitely, this is a big lever that they're pulling here to try to generate more revenue.
09:23The estimates are they made $8 million in iOS ads, or they're going to across 2026.
09:29Putting it in maps is probably going to double that pretty quickly.
09:32Hey, speaking of pulling a lever, you've got another story.
09:34Man, I mean...
09:36He still has time for us, Joe.
09:37What's the other story?
09:38I already forgot.
09:39Apple just started its AI comeback bid.
09:42Oh, yeah.
09:43So, talk to us about that.
09:45What's coming up, this Worldwide Developers Conference, and what we might get in terms of AI levers?
09:50Yeah, as they reported, I think, first week of January, second week of January, they're going to revamp Siri as
09:55a chatbot to compete with ChatGPT and Claude and Gemini and what have you.
10:00So, all the focus will be on Siri and AI.
10:03Is this right that they report on, oh, yeah, May 1st?
10:06I think that's an estimate.
10:08Apple?
10:08That's an estimate.
10:09Okay.
10:10So, Mark...
10:11Typically, that time frame is typical.
10:13WWC is typically for developers.
10:15I mean, that's the whole point of it.
10:17You get unveiling of iOS.
10:18They announced the new OSes, right?
10:20So, they'll announce iOS 27, the other new operating systems.
10:23And so, yeah, developers got a bunch of new frameworks and tools, and consumers got a bunch of new features.
10:28But this year is going to be lighter than usual.
10:33All the features are going to be about AI this year.
10:35Everything else is going to be pretty minimal.
10:36You're not going to be able to do any of the tools you have for a relationship.
10:36So, these have a lot of opportunities that areилин.
10:36You're not going to be able to do some chemicals in the field of Nicole.
10:37You're not going to be able to do some chemicals in the field.
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