Ternus Takes the Apple Throne, Inherits a Steep AI Climb

Tim Cook’s 15 years as Apple’s chief executive officially ended on September 1 and now the torch has been passed on to John Ternus, who is the company’s long-time hardware. It’s Apple’s first leadership change in the company since Cook replaced Steve Jobs in 2011 and a timing that’s particularly unfortunate for the company.

Cook isn’t going away, at all. He’s stepping into the executive chairman position where he will continue to be involved with the Trump administration and Chinese government, and has told Ternus that he expects to be of service in any other manner or capacity during the transition. 

Apple’s long time board chairman, Arthur Levinson, also fills the position of an independent director the same day. Ternus, meanwhile, is also appointed to the board.

The name doesn’t sound familiar outside Apple circles and that is pretty commonplace for Apple. Ternus has been a member of Apple’s product design team since 2001 and worked his way up the ranks, eventually becoming senior vice president of Hardware Engineering back in 2021. 

In the process he’s been involved in the development of almost all of Apple’s current devices; iPhones, iPads, AirPods, and more. He’s taking the top job at nearly the same age that Cook was when he got it.

A trillion-dollar legacy and a much bigger company to run

There’s something to ponder about what Cook is actually passing on. At the time of his tenure when he took the helm of CEO, Apple’s value was about $350 billion. When he stepped down this week, the firm had become a $5 trillion company, one of the most meteoric growths in share value in corporate history, and a power that was now more significant than the iPhone itself, thanks to the Apple Watch, AirPods, Apple Pay, and its new services operation.

However, larger doesn’t imply simpler. Ternus takes over a company that for the first time in many years is not viewed as the pace setters, at least not in AI.

The AI problem Ternus can’t outsource

That’s where the real challenge for the new CEO begins. For the past two years, Apple has been taking flack over a sluggish and clunky response to generative AI, particularly with Siri, which has been lagging far behind Google, OpenAI and Amazon’s assistants. 

Instead of toeing the line and developing a foundation model to face off against, Apple bet on licensing the tech. The reported cost is estimated to be around $1 billion per year to operate a revitalized Siri on Google’s Gemini, whereas rivals such as Microsoft, Google, Amazon and Meta are investing in their respective AI systems at least $100 billion per year.

It’s a very different proposition, and many analysts have conflicting views as to what it is – is it a prudent cut-back or is it a company that’s been left behind and is playing catch-up with another engine? In fact, even on his final earnings call, Even Cook conceded Apple doesn’t have “a complete plan” for how the compute costs will differ when the new Siri is in widespread use.

This is considered to be Ternus’s “make or break” shooting test. The majority of the content being released in the fall is already in the works under Cook, and Ternus’ direction may not only be a long way off but not until 2027, said IDC’s Francisco Jeronimo. 

However, the pressure is in the present moment. The AI stack is no longer entirely in Apple’s hands as the company has historically been with hardware and software development, so that’s a new way of doing business for a company that has built its fortunes on doing everything itself.

Ternus will not enjoy a quiet runway to settle in, either. His first major public appearance as CEO will be at Apple’s “Surprise and Shine” Sept. 9 event, where the company will reveal its first foldable iPhone and the all-important, long-delayed Gemini-powered Siri upgrade. 

Early internal testing has reportedly been successful, but a successful demo and a successful roll-out to hundreds of billions of users is not the same.

Wall Street for now is skeptical, not convinced. As the handover kicked in, Apple stocks fell, and some analysts saw the day not as the celebration of Cook’s legacy, but more as a test of whether Ternus can find Apple’s “next platform” once the device hardware is out of the picture, and whether Apple can truly harness its huge installed base of devices as an AI advantage, rather than a license revenue racket.

TheTweaks Verdict

Ternus acquires one of the most valuable companies on earth, but the ‘low hanging fruit’ has been picked. Cook’s Apple learned the hard way about the hardware, ecosystem lock-in and services revenue that are essential to Apple’s ability to compete with Ternus’s Apple on AI without establishing its own foundation model. 

The event that happened on September 9 is actually the first real report card, and whether or not the new Siri will be a smart short-term solution or long-term liability will be a good indication of whether “borrowing” Gemini was a good idea. 

We’ll be keeping an eye on that launch and examining the foldable iPhone and the new Siri hands-on as soon as it’s in our hands.

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