Mark Gurman on breaking the Tim Cook succession scoop and what John Ternus will do differently at Apple

Speaker 2: of Great your hanging. Talk soon.

Speaker 1: We have our next guest, Mark Gurman, the Gurmanator himself in the waiting room. Let's bring him in to the TBPN Ultra Dome. Mark Gurman, how are you doing?

Speaker 6: Tired. How are you doing?

Speaker 1: Tired. I can imagine. This has been months in the works. You predicted this many times, but also on our show. How did this come together? Did this match your timeline? Were you surprised by this particular Monday that it was announced? Or

Speaker 2: Walk us through the scoop.

Speaker 1: Yeah. And get

Speaker 2: the get the scoop.

Speaker 1: Get the scoop ready. This is the scoop. I've the golden scoop for you.

Speaker 2: The golden scoop.

Speaker 6: Oh, I've never I've never seen that.

Speaker 1: Yeah. That's awesome. It's a new prop in the studio. You'll have to The new

Speaker 6: prop I like to

Speaker 1: see. Next time here in person.

Speaker 6: The OpenAI deal is already doing work for you guys.

Speaker 7: There you go. New props.

Speaker 6: So here's the deal. A reason I published my profile of John Turnis just a few weeks ago. Right? This was all coming together. Things really ramped up internally at Apple on this at the end of last year. Things have been in motion. The plan was to announce it after the fifty year anniversary celebrations. And it almost felt like the fifty year celebrations were not just, you know, about Apple's fifty years, but sort of a goodbye celebration to Tim Cook and his legacy at the company. So it all came together over over over several months. This really started about two years ago when Tim Cook identified John Turnis as the next one. Turnis had been prepared for this role probably for over five years at this point, they put him on the executive team when he became SVP of hardware engineering. But this started in in early twenty twenty four, and at the time, I I wrote that that was the first time I wrote that he would be the next one.

Speaker 1: Yeah. How do you have you been able to process I know you've published a few memos. Have you been able to ascertain anything about the internal response? Are Apple employees excited about this? It feels like it's been managed from a communications perspective very carefully, and so it shouldn't have been a surprise to anyone. But are Apple employees generally excited about this? It seems like, there's a lot of cause for optimism, but I'm always interested

Speaker 8: Yeah. To hear

Speaker 2: There was that one article a couple months ago where clearly they were getting quotes from former employees that were like kinda taking potshots at him. Yeah. Basically saying like He hadn't He's never made a hard decision.

Speaker 1: Yeah. That was the quote that went to the journal, but I don't know. It seems like it didn't matter because he got the job.

Speaker 6: Well, got the job two years ago, and I think he's going to do hell of a job in this new role. I am quite optimistic for Apple in the long term with Ternus at the helm. He has product sensibilities that Tim Cook simply doesn't have. He has product decision making ability that Tim Cook certainly had, but wouldn't utilize because he himself knows that product based decisions is not where he could have the most impact. Just like Tim Cook really oversaw the operations part of Apple as the CEO and led left product development to other members of the executive team, my expectation is that John Ternis will be intimately involved with the product side of the organization as he was in his prior role to CEO, and will leave the operational side to people like Sabi Khan and Priya, the people who run the operations division at Apple Supply Chain Manufacturing Procurement, AppleCare, you name it. So he's going to pick his spots, and his spots is hardware and product development. There's a reason that when he chose his successor for the hardware engineering organization, he chose Tom Mariab. Not an innovator, but an incredible execution guy when it comes to hardware engineering product quality. He did that because his belief is that he will still be intimately involved and sort of be that product visionary for Apple in this new chief executive position.

Speaker 1: Yeah. Does when when I remember Steve Jobs, I think of Jobs as an innovator, as a visionary, as someone who both did Pixar and the iPhone, you know, so many different projects, a lot of them wildly successful. Tim Cook felt like a focusing of that a little bit, but you still had the car vision pro. There's a few different projects going on. Is this more is this the most focused Apple has ever been and will ever be? Or do you think that there's do you think Ternus has, like, some aces up his sleeve where he might wanna take a wild swing at something?

Speaker 6: The thing with Tim or what John Ternus is gonna have to do is stay the course. Mhmm. Annual iPhone, iPad, Mac, Apple Watch, AirPods upgrades. Yeah. But at the same time, is going to need to do a better job of bringing out new product categories that Tim Cook has done. If you look at Tim Cook's legacy in terms of major new products, it really was on the services side. The AirPods and Apple Watch, you know, those were both really developed by management teams and engineers and people who came from the Steve Jobs era. That's not a slight, but my point being is that we really haven't seen anything wholly new that is also successful since 2016 with the AirPods and the Apple Watch at the 2014. The Vision Pro has obviously been a Tim Cook product, a Tim Cook priority, and it's been sort of a flop, at least for now. I know Apple has a very long, decade long spatial computing roadmap. They eventually want to get to AR glasses, they'll have display list glasses to compete with Meta several months from now into 2027. Mhmm. But he needs to get cracking. There are six major Apple products in development right now. Six major new product categories. Mhmm. AI AirPods, smart glasses

Speaker 4: Yep.

Speaker 6: Pendant Pendant. Smart display

Speaker 1: Is that the lamp or the the kitchen thing?

Speaker 6: No. No. Lamp is number five. Smart display is is is is different.

Speaker 1: Okay.

Speaker 6: The tabletop robot, so that's the lamp, the moving lamp. And then number six is a I'm only gonna say very little about this, but a security camera.

Speaker 1: Okay. Interesting. Well, at least the Apple Vision Pro has one key fan.

Speaker 6: Do you think the

Speaker 2: lamp do you think the lamp is a is a predecessor for a humanoid? Do you think Apple would ever do a humanoid? I

Speaker 6: do. I do. But I think it's gonna be a decade if they do and they're gonna wait and It says

Speaker 2: it says a lot that they're not

Speaker 1: Talking about it?

Speaker 2: That you don't know about an internal humanoid project yet.

Speaker 6: Yeah. Oh, I do.

Speaker 1: Oh. But but Yeah.

Speaker 6: They're exploring humanoids and the idea of being humanoid.

Speaker 2: Yeah. But they're They're

Speaker 6: not working on it full throttle, but they have a large robotics initiative. They're working on AI robotics technology, and they're also working on robotics hardware. John Ternis actually took control over the robotics hardware team about a year ago. He took it from the AI chief that Apple, you know, got rid of a couple weeks ago, John Jurewicz. Yeah. But they're also looking at actually they're building a gigantic manufacturing arm, or a gigantic robotic arm that they want to use in manufacturing, but also used in Apple retail stores to grab products off the shelf in the back room and whatnot and bring it into the store. That's probably five years away, but they're looking at robotics from a manufacturing standpoint, from a retail standpoint, and also, most importantly, a consumer standpoint. They've also been exploring a mobile robot, something like an Amazon Astro, but I don't think that's probably gonna see the light of day.

Speaker 1: That's fun. I feel like Apple has a perfect brand

Speaker 2: Talk about robotics. Talk about Ternus' challenge with supply chain broadly, what you think he's gonna be focused on over the next five years.

Speaker 6: Oh, I don't think he will be. I I don't think he will be. I think just like But is that not

Speaker 2: but is that not you're saying, like, just basically

Speaker 1: He's delegating it.

Speaker 2: Broadly ignored that it's a kind of a key risk to the business to have, you know,

Speaker 1: some I know. His team.

Speaker 6: Yeah. With the hands in in all hands meeting with Apple employees this morning, he was pretty clear that Tim Cook didn't do everything. Tim Cook chose his spots. And Ternis said that he's gonna pick his spots as well. As we know, turn Tim's spots was operations, finance, and sales, and he delegated everything else. My sense is that Ternis is going to Ternis' mandate. Ternis was hired because they believe that he is going to be able to bring Apple back to the forefront of product device innovation.

Speaker 1: Mhmm.

Speaker 6: Okay? They already have the best in class operations, finance Yeah. Salespeople. They don't need Ternus to do that. They need Ternus to keep his eye on the prize, which is products.

Speaker 1: Yeah. And what do people point to when they say that there's a risk to Apple staying on the frontier of product development? I I saw the Android phone that has the the the privacy screen that you toggle on and off. That looked like kind of a cool feature. There's folding phones that they're working on. But are are any of these features that exist in other phones? It feels like they haven't actually gotten a groundswell and started pulling iPhone users away from the ecosystem. But are there key features that people are worried about or what It's not yet. Yeah. Okay. It's not

Speaker 6: here yet. Nothing you've seen is the risk.

Speaker 3: Okay.

Speaker 6: The risk is whatever the hell Meta and OpenAI and Hark and all these companies eventually come out with. The risk is one of those companies doing something really cool Yeah. And jettisoning Apple from that perspective. But we all know that nobody has done quote unquote cool stuff yet to steal away iPhone users. Nobody is ditching their iPhone for Android. In fact, the switching is going in the other direction despite the fact that Apple is supposedly the most innovative company in the world and has the least innovative AI technology.

Speaker 1: Yeah. But consumers care about value and things like the MacBook Neo really deliver that value. Brand, colors, value. System, privacy. Yeah.

Speaker 6: Ternus was only senior VP of hardware engineering at Apple for five years. Mhmm. It's a short tenure to be an SVP of a division at Apple. And the reason is because he's oh, there you go. No. He's been at

Speaker 2: Apple twenty five years. Yeah. I'm kidding. We use that ironically.

Speaker 6: No. I know. But the the point I'm I'm I'm trying to make is that he still has a legacy. And Ternus' legacy is making Apple hardware more performant in terms of speed and battery life

Speaker 3: Mhmm.

Speaker 6: And higher quality. Mhmm. He's really focused on the durability and longevity and the reliability of Apple products. Mhmm. And it's meaningful, I think, that the person that they chose to be Chernis' replacement in hardware engineering, Tom Harieb from Intel, is a product quality and reliability expert rather than a product design person.

Speaker 1: Yeah. What was the thinking? I mean, I remember we we talked about this, how I I got the new iPhone and it has immediately been dinged.

Speaker 2: What was the thinking on making

Speaker 1: it And, but but but it's but it's better for heat or better for wireless connectivity even though you can't get the color to adhere to the to the material as much, so it scratches off. Is that the is that the current trade off? Yeah.

Speaker 6: Yeah. There's trade offs with every material. Like, titanium was light. It looked cool. You could beat blast it. It's a so, know, interesting. I mean, it looked interesting, and it gave them a good marketing point. Like, come buy a titanium phone, like anyone cares about the material or their phone. But it had really bad properties related to heat. Aluminum, which we've known for twenty years, is an excellent material to build consumer electronics out of, so they went back to the basics. You know, they were really talking about at the end of last year splitting the line between ultra thin with the iPhone air and pushing the iPhone pro to the right as much as possible by making it more performant. Yeah. My expectation is they're really doubling down on this. Their goal is really to just squeeze as much performance and power in these iPhone Pros as possible. And for everyone who needs less power, you can get the thinner and lighter iPhone Air. And Sure. I think you're going to continue to see Ternus push in that direction, making the MacBook Pro as amazing and most performant as it can be in pushing everyone else to the MacBook Neo and the MacBook Air. And I think his legacy on performance and product quality is really important thing to remember.

Speaker 2: Yeah. Has Ternis ever talked publicly about AI in any capacity?

Speaker 6: He talked about AI in his all hands meeting with employees this morning. He said that

Speaker 2: I'm gonna check it out.

Speaker 6: No. Just hold on.

Speaker 2: I'm kidding.

Speaker 6: Hold on. I don't want to give you inaccurate Yeah. Fake news.

Speaker 1: Just a good sign.

Speaker 6: Okay. Yeah. Just hold on. Bear with me.

Speaker 1: I think I Internal memos.

Speaker 6: No. No. No. No. Okay.

Speaker 1: He said

Speaker 6: that he's especially excited to be stepping into this role at this moment because I am telling you we are about to change the world once again. He said Apple has an incredible roadmap ahead, and that I'm not exaggerating when I say this is the most exciting time to be building products and services at Apple in my entire career. AI

Speaker 1: There you go.

Speaker 6: Is going to create almost unlimited potential. We're going to be able to keep unlocking possibilities that that are going to create entirely new opportunities for our products and services, and I'm so excited about what that's gonna mean for our users.

Speaker 8: Yeah.

Speaker 6: Earlier this month, he reorganized Apple's hardware engineering division around in a new AI platform that they're going to be using to improve product development processes and overall quality.

Speaker 1: Interesting. Okay. I saw a post here from Bubble Boy. I want your reaction. Apple is about to become the mecca of hardware engineers around the world with John Turnis taking over at Apple. Is Apple not already the mecca? Is is there actually somewhere to go, but that that is up in terms of hardware engineer recruiting? Do you see this as changing the culture in some meaningful way?

Speaker 6: I mean, they don't pay, like, these, you know, OpenAI's, HARCs, and Metas of the world. They're Apple has been pillaged by OpenAI and Meta and all these companies. As of late, they are stripping apart Apple's hardware engineering division, hiring people from every team they can get their hands on, throwing very big offers at them. And so this has been a really big issue that TURMIS has been dealing with over the last year and change. So but Apple is, know, the hardware mecca. They're the company that everyone wants to poach from, and they're the company that people go to to learn how to build consumer devices. So this is definitely yeah. I I agree to a large extent with you actually. Yeah. Alright. With Bubble Boy.

Speaker 1: Yeah. Alright, Bubble Boy. What I did this might be somewhat separate, but just get me up to speed on the folding iPhone. What is the latest there?

Speaker 6: Announced in September, Turnus' first big new product. Yeah. Super exciting. Super pumped. Yeah. We've talked about this. I'm sick of the candy bar phones. It's been the same junk for fifteen excuse me, twenty years now. Yeah. I want a foldable. I want a bigger screen.

Speaker 1: Yeah. I really hope It's exciting.

Speaker 2: John Neat wants a newspaper sized phone.

Speaker 1: I well, they have those. I've seen those in China. He's through the the trifold. Right? But this is a bifold.

Speaker 6: Don't get me started on the trifold. Explain the trifold.

Speaker 1: Wait. Why are they awful? It seems amazing.

Speaker 2: John wants pages of screens that he can turn.

Speaker 6: Blimsy and they break.

Speaker 1: Okay.

Speaker 6: They need a trifold and Apple like quality in twenty years because, you know, like, takes good old time when they do a when they when when Apple does a trifold, it'll be good.

Speaker 1: Okay. Okay.

Speaker 6: You know, I open up a foldable phone right now, you open it up and you can hear the screen sort of creaking. Okay. Right? And then you have that big Yeah. Line in the middle, and then it's like impossible to get your thumb in to open the thing. Yep. I hope Apple fixed that. I don't wanna hear a creak. Yep. For $2,000, I don't wanna hear a creak. I don't want it to stand stand sound like I'm stepping on, you know, a wooden floor.

Speaker 1: Yeah.

Speaker 6: Right? I want it to just open, and I want it to open quickly and nicely and it not be like I'm trying to lift the weight.

Speaker 1: Yeah. It's still gonna be weird for video consumption, though, because I feel like we've done vertical videos, nine nine by 16 and then 16 by nine widescreen. But if you open up a foldable phone, you eventually get a square, and that doesn't really make like a movie watching

Speaker 6: experience better. Apple's is different. Apple's is like the new Huawei phone where it is iPad screen ratio.

Speaker 1: IPad screen ratio. When you open it. Okay.

Speaker 6: When you open it.

Speaker 1: Yeah. Okay. So still black bars

Speaker 6: yeah. Sure. There'll be black bars.

Speaker 1: When you rotate it black bars. On the top of box.

Speaker 6: If you're

Speaker 1: watching like a cinema film or Right. Even if you're scrolling Instagram, like, you you won't necessarily get more view because for so long, all the content production has been ultra widescreen. If you're making a Tarantino film and it's super cinematic, or if you're on TikTok and you're doing vertical video, then you're then you're you're gonna have black bars on the side for for the most part. But for so many other applications,

Speaker 7: you know,

Speaker 1: for Word documents and notes and

Speaker 6: TBPN will look great on it.

Speaker 1: Yeah. Something to look forward to.

Speaker 2: What do you think Ternus' new comp package looks like? You know, we were we we almost marched on Cupertino because of Tim Cook. To to get raise.

Speaker 6: Tuck yourself to the the spaceship. I

Speaker 2: know. Yeah. Exact

Speaker 6: I would I'm just guessing. I'm just guessing. I think a million shares. Over ten years.

Speaker 1: That's pretty big.

Speaker 6: And can I just tell you why I think that?

Speaker 1: Yeah.

Speaker 6: Why? Because that's what they that's what they gave Tim Cook when he was named CEO, 1,000,000

Speaker 1: over Sure.

Speaker 9: Ten years.

Speaker 6: So I would assume it's the same. Yeah. But again, I I I don't know.

Speaker 2: Yeah. Entry level researcher salary, but it's a good start. You can

Speaker 7: Pretty much. If you

Speaker 1: can Tim

Speaker 6: Cook is getting Tim Cook, you know, Tim Cook was getting a 100,000,000 a year, and then everyone flipped out except you guys, and so he had to cut his pay to like 40,000,000, and then when things died out, he's like, alright, I'll I'll I'll take I'll take my $7,080,000,000.

Speaker 2: I slept peacefully for for those years, And then you should see my sleep score once.

Speaker 1: We were really we were really the the strongest supporters of the of the Tim Cook pay package.

Speaker 6: I guess I guess a million.

Speaker 1: I wish you I mean, it's just like look at the value

Speaker 2: that he's created the same amount as a guy leading, you know

Speaker 1: A $4,000,000,000,000 company.

Speaker 2: Make it make sense.

Speaker 6: Yeah. Maybe it'll be 500,000 shares. Maybe it'll be 500,000 shares. I I don't know. But I know that they gave Tim Cook a million. You gotta get those

Speaker 1: numbers up. You gotta get those numbers up. It's time to march.

Speaker 6: Really? You're all in on furnace already?

Speaker 4: We should free up the leap art.

Speaker 1: We're we're bullish on both. We love both here.

Speaker 6: Well, now you get you get both now.

Speaker 1: I know. We do. The yeah. What why why is 65 a retirement age for the CEO of Apple? Like we were talking about Warren Buffett. He was able to manage a trillion dollar organization well into his nineties. Is it a more physically demanding job? Is he traveling more? Is it is his hand ringing from shaking hands in DC? Like, why not have another ten years if you're in that seat?

Speaker 6: I don't think the hand situation has much to do with shaking other people's hands.

Speaker 1: Okay.

Speaker 6: Why is he not there another ten years? Well, he needs to give the new guy runway.

Speaker 1: Okay.

Speaker 6: I'm sure there are some I'll just tell you what Tim Cook not going to get into it. What I'm going do is tell you why Tim Cook said he's stepping down. He said he's stepping down because it's the right time, and there's an intersection of John Turnis being ready, Apple's finances being in a very strong place, and Apple's future roadmap being in a strong place. In terms of the real reason why he's stepping down now, you can read some of my prior articles

Speaker 1: Sure.

Speaker 6: Taking a deeper look at the at the situation.

Speaker 1: Okay. Yeah. Makes sense.

Speaker 2: Cool. I love seeing you. I love talking to you. Thank you for Congratulations. Coming Get some

Speaker 6: see you guys

Speaker 1: coverage. Get some sleep.

Speaker 2: Great to see you, Mark.

Speaker 1: And keep up the amazing work. We'll see you soon.

Speaker 2: Same, Sam.

Speaker 6: We'll see you in fifteen years for Terminus Junior.

Speaker 1: Can't wait. We'll see you. Goodbye.