transcript

Speaker 1:
[00:00] Massive, massive news. Tim Cook to step down at Apple. This broke yesterday. Garminator had the scoop, of course, he's coming on the show later today, but it's on the cover of the Wall Street Journal today. Heavily predicted, often debated. It's a time to reflect on Tim Cook's legacy and what's up next for John Ternus, the longtime insider.

Speaker 2:
[00:19] Can we just say, incredibly well executed, incredibly smooth. They sort of telegraphed it. It wasn't a surprise. They was already fully priced in. I personally was hoping that the market would give Tim Cook a 21% salute. Where when the news went out, it just immediately nukes 21%.

Speaker 1:
[00:38] Massive red candle. Let everyone know. We don't like this. We love him.

Speaker 2:
[00:43] It's a sign of respect. Of course, rebound immediately. But I think that's something that the market, collectively, should try to do for great CEO.

Speaker 1:
[00:51] More symbolism in the candles, for sure. Chartology is really the key thing.

Speaker 2:
[00:56] It's a 21% salute.

Speaker 1:
[00:58] Still, nearly a $4 trillion company. They're doing fine and they're cooking. So let's go through a little bit of the review of the news and some of the previous discussions that we've had around Tim Cook and John Ternus because we're going to be learning a lot more about John Ternus. He's probably going to do a lot more content, a lot more media, a lot more interviews. And we will be hearing from him at Keynote Events for probably over a decade, maybe two decades. We will see. So in January, Bloomberg reporter Mark Gurman, who's coming on the show later today, predicted that John Ternus would succeed Tim Cook as Apple's next CEO.

Speaker 2:
[01:32] Let's just pull up this clip. Let's give some credit to the Gurmanator.

Speaker 1:
[01:35] To the Gurmanator. He didn't predict it on our show first. I think he scooped it and posted it.

Speaker 2:
[01:40] I know, I know. But this was back in January. I'd love to have the clip. I dropped the clip.

Speaker 3:
[01:44] Everyone else on the Apple executive team, late 50s through their mid 60s, turning 66 this year in the case of Tim Cook. You're Apple's board, you like continuity, you like an insider, you like people who know what they're doing and have been there for a while, they know where the bodies are buried. These guys all have hundreds of millions of dollars, if not more.

Speaker 2:
[02:04] Pause. I love Mark Gurman so much.

Speaker 1:
[02:07] He's the best.

Speaker 2:
[02:08] He's truly the best. And he's coming on.

Speaker 3:
[02:10] At 50, he's the only one who is, if let's say Tim Cook hangs out another three to five years, you're not gonna point another CEO who's 65, 70 years old. He's the only guy. Apple, they get the vast majority of the revenue from hardware. He's the hardware guy. Have they screwed up any hardware since he's been in charge? No. He's a steady hand, knows what he's doing. He's really the only choice. There was this New York Times report a few weeks ago, basically saying that it could be Greg Jawswiak, it could be Eddie Hsu, it could be Deirdre O'Brien, it could be Craig Federighi. It's for sure not gonna be Craig. It's not gonna be Deirdre. It's not gonna be Eddie. It's not gonna be Jaws. The only category that makes sense is an operations person, because you look at the current CEO, Tim obviously comes out of the ops world. You look at the guy who would have been CEO if Tim Cook didn't stay so long. I'm not saying he shouldn't have stayed so long. He's done obviously a fantastic job for shareholders and employees and what have you. Would have been Jeff Williams. He was the COO. So Sabi Khan, he was named COO a few months ago, but he's really been in that job for the last half a decade I would say. So anyways, it'll be Ternus or Sabi or someone completely out of left field. I don't think this is imminent. So we'll see what ultimately happens, but all signs are turning towards Ternus. Everyone has an opinion that Ternus is going to be the next CEO. Fine. I've been shouting this from rooftops for the last two years, but no one has given evidence like what is this based on, right? Has there ever been a baton handoff? Is he getting more responsibility?

Speaker 2:
[03:44] Do they have a big baton?

Speaker 3:
[03:46] We've got one of these and a baton. You know what you have? You have white smoke coming out of your...

Speaker 1:
[03:51] Do they have a big smoke?

Speaker 3:
[03:53] Very environment friendly.

Speaker 2:
[03:54] Do they have a big scoop?

Speaker 3:
[03:55] Maybe. So...

Speaker 1:
[03:59] Is that the end of the clip?

Speaker 3:
[04:00] You know, maybe out of the...

Speaker 2:
[04:01] Do they have a comically large baton? Like we have our scoop?

Speaker 1:
[04:07] Yeah. Oh, my German, the scoopinator. He's a scoop doggy dog, a scoop athlete, the scoop, the scoop, the scoop is on fire. Yesterday evening, Mark was the one with the scoop. Tim Cook will assume the role of Apple's executive chairman and John Ternus will take the reins of the company. Mark followed up with a scoop with internal memos from both Cook and Ternus announcing the transition. I don't, I mean, I understand, I don't know, maybe I don't understand what it's like to be 65, but I was always optimistic that the Warren Buffett 65 to 95 would be the new trend and that people would just say, you know what, Tim Cook's healthy. He's going, he's Apple's guy.

Speaker 2:
[04:49] Everything to date was a warm up.

Speaker 1:
[04:50] Yeah, everything.

Speaker 2:
[04:51] It's time to go on the actual run.

Speaker 1:
[04:52] That's what I would, I mean, I totally understand.

Speaker 2:
[04:55] He's like, I got another 10X. I got another 10X. I'm going to, I'm taking us to 40 trillion.

Speaker 1:
[05:01] Yeah, I don't know. I mean, maybe Warren Buffett's in a different world because he's more of an investor. Maybe doesn't need to travel as much. Doesn't need to be in the arena, shaking hands, kissing babies, doing product launches, you know, being in DC, getting wrangled into things. Like Buffett can be more like hands off and just sort of read the news, review the financials and delegate.

Speaker 2:
[05:25] Some liquidity.

Speaker 1:
[05:26] Yeah, yeah.

Speaker 2:
[05:26] If it's needed.

Speaker 1:
[05:27] Yeah, it's more, it's a more hands off role. I mean, I imagine that the role of CEO of Apple is incredibly demanding, but I like the idea of just locking in and being like, oh yeah, I'm 65, everyone expects me to, everyone expects me to step down, but I got another 30 years in me. But, you know, he chose a different path and he is retiring or stepping into the executive chairman role. Ben Thompson published Tim Cook's Impeccable Timing, which eulogizes Cook's impressive accomplishments as the head of Apple. Ben Thompson kicks it off with an interesting thing. He says, it's the nature of business that the eulogy for a chief executive doesn't happen when they die, but when they retire or in the case of Apple CEO, Tim Cook announced that they will step up to the role of executive chairman on September 1st. One more bit of exception is when the CEO does die on the job or quits because they're dying. But the truth of the matter is that where any honest recounting of Cook's incredibly successful tenure as Apple CEO, particularly from a financial perspective, has to begin with the numbers. And he says that the numbers are extraordinary. Cook became CEO of Apple on August 24th, 2011. And in the intervening 15 years, revenue has increased 303 percent, profit surged 354 percent, and the value of Apple has gone from a mere 297 billion to over 4 trillion, a staggering 1,251 percent increase. And there was some chatter back and forth on the timeline over whether Tim Cook had simply put Apple on cruise control and lucked out, as many big names in tech also saw 10 to 40 X increases in their market caps. This is from Brandon Grell's newsletter at tbpn.com. You can sign up today. But this interpretation ignores the fact that many of the biggest public tech companies in 1980, when Apple IPO'd, are no longer even close to the top of the pack anymore. And Brandon cites Xerox, Motorola, Texas Instruments, IBM, and HP, which all fell by the wayside over the past 30 years, while Apple built the biggest consumer hardware company on the planet and thrived in the public market. And I was doing some digging on this as well. I pulled up, you know, it's easy to look at, like, well, zoom back to the Mag 7. All of the Mag 7 have done fantastically well over the past 15 years during Tim Cook's tenure. Did he do anything special? Is he in a different category in some way? And maybe not when you look at, when you look backwards from the current Mag 7. But if you go back to 2011, when Tim Cook took the reins and you look at what were the biggest tech companies there then and how have they performed, it does look like outperformance because Apple was at 377 billion. That was big, huge, the biggest company at the time. Then Microsoft at 218.

Speaker 2:
[08:22] Yeah, you have to go look at what their peers were at the time where he took the helm.

Speaker 1:
[08:27] And to be clear, Apple, Microsoft, Google and Amazon were clearly there. FANG was the term at the time. Facebook, Amazon, Apple, Netflix, Google. For some reason, Microsoft didn't make the cut in that acronym. That has since changed, of course. But there were a lot of companies that didn't go on as significant of runs. You have IBM, Oracle, Intel, Cisco, Qualcomm and HP, all that were in the top 10. They were sort of the MAG 10 of 2011. And now they are not in the MAG 7, although many of them have done very well. This was our take from a long time. We like to harp on the failure of Apple Intelligence and how Siri is ineffective sometimes and the FaceTime interface is odd and the new iPhotos app is hard to use. But where it matters...

Speaker 2:
[09:19] We give them credit on Genmoji.

Speaker 1:
[09:24] No, where it matters is did they navigate tariffs? Did they navigate supply chain? Did they navigate the transition to Apple Silicon, delivering a great product consistently that doesn't break? Like, we have ordered so many Apple devices throughout building TBPN, and there was a time when you would get a new consumer product and it would just be, oh, it's a bad one. I got a bad one. And I got to take it back. And that's never happened. The quality control is flawless. And navigating a very, very difficult chip export act from Biden in 2022 all the way to the Trump tariffs, to different political swings back and forth and back and forth. And Tim Cook has just done a great job of like keeping the wheels on the train going down the track. And I think that should be celebrated, even though the sexy new AI features are...

Speaker 2:
[10:16] He's bound to be under appreciated because he wasn't the visionary that Steve was, but he also never, I don't think he ever wanted to be seen in that way. But the consistent operational excellence over almost two decades is almost unprecedented at this scale. Yeah, just the way you put it, right? The same experience that I had getting a new Apple computer as like a teenager I have today. It is actually almost remarkable how similar the experience is. You open this wonderful box, you get a great device that works for a long time, and you still get that today. So the consistency... Yeah, I think he will just get more... When people kind of process the run over time, he will just get more and more respect.

Speaker 1:
[11:07] Yeah, and a lot of the other computer manufacturers have had to go into bloatware and pre-installed software, and Apple has been very good at holding the line there. They've, of course, ramped up their services business, integrated advertising in places that were somewhat unexpected, since that was always how they were counter-positioned against Google. But they've done it in a way that hasn't been that annoying. I feel like I don't see that many people complaining about ads in the app store. People see the ads and they're like, wow, this company is bidding on the keyword for their direct competitor. That is extremely competitive behavior. The same thing happens on Google. Didn't expect to see it in the Apple ecosystem. Of course, it's going to happen.

Speaker 2:
[11:49] Raghav in the chat says, not a single product recall under Tim Cook. Is that possible?

Speaker 1:
[11:55] Wow.

Speaker 2:
[11:56] I think that is incorrect.

Speaker 1:
[11:58] What did they recall?

Speaker 2:
[11:59] It says they recall a 15-inch MacBook Pro in 2019, the AC wall plug adapter in 2016 and 2019, battery gate service pro.

Speaker 1:
[12:09] They've had some back and forth. But a very, very successful run. The other two things that the chat was mentioning was the Apple car and the failure of that program. Maybe a little bit, they bit off too much more than they could chew. I think, looking at what's happened in China with every phone manufacturer launching a car that's extremely impressive, I would have loved to see Apple execute there. And I think that would have been very good for the American technology industry, the electric vehicle industry, a variety of different American industrial efforts, but it was not to be, unfortunately. Then there's the Apple Vision Pro, which I think a lot of people look at the churn rates, look at the retention rates, and they just see it as an underwhelming product. I still like it, but I'm in the minority, and I acknowledge that fully. I do think that they made the right decision to turn it into a home cinema, a home theater. They understood that there was not enough of a video game library, a VR game library to plug into in any meaningful way, and so they made the decision. I think one of the lead staff members on the Apple Vision Pro project was from the Dolby Cinema team, which had done Dolby Vision and some of the actual theater build outs, and so they were able to bring that experience and understand what actually makes for a great movie watching experience in a premier cinema, and how can we recreate as much of that as possible in VR. Still, obviously didn't hit the mark fully because the product has not taken off by any stretch of the imagination, but overall it was a fun project, and I'm hoping that they continue that. It might wind up pivoting into just camera glasses and they'll go up against the meta ray bands, which might be the more prudent business strategy, but I still like these incredible investments in VR. What are you laughing at?

Speaker 2:
[14:05] Josh over at Semaphore says, nobody tell the new Apple CEO that he has a streaming service, we've got a good thing going here, lighting iPhone and AirPods money on fire to make great movies and shows, and we don't need that getting any extra attention right now.

Speaker 1:
[14:20] Yeah.

Speaker 2:
[14:20] 5,000 likes.

Speaker 1:
[14:21] Yeah. It is interesting. Ternus is about as far as you can be from the Apple TV services organization. But I don't know, I talked to a filmmaker in Hollywood, a very successful filmmaker years and years ago before Apple TV was really ramping up, and he was saying that Apple's brand is so prestigious that it's antithetical to the Hollywood mindset, which is much more VC risk on, you're going to have flops. Every movie studio understands that it is impossible to predict the perfect success and have the level of polish that comes from these slight iterations.

Speaker 2:
[15:00] I think you could.

Speaker 1:
[15:02] Yeah, a bit different, for sure. So it's a different culture because if you have Apple's, Apple hasn't, I mean, they've had like flops, but even the flops, they still feel like very on brand. They don't have a silly movie that is just like bad, and running that risk was always a problem. But I feel like Apple navigated really, really well, especially with the F1 project, and has done really well with the content side, and they have held a brand standard that feels like almost at the level of HBO pretty quickly, whereas some of the other streaming services have kind of gone more scattershot, more reality TV, more sort of silly projects that might entertain viewers, but don't fully, they don't create a cohesive brand idea of like what am I getting when I open that particular app on the Apple TV? Mark Gurman said on TBPN in January that Ternus really viewed, really is viewed as the ultimate hardware guy at Apple. Ralph Winkler at the Wall Street Journal published an article yesterday detailing Ternus' pedigree with physical products. Quote, if Jobs is a product visionary and Cook a supply chain guru, Ternus is a hardware savant who exists somewhere in the middle. Ternus, who has a background in mechanical engineering, has been working at Apple for 25 years and most recently led hardware engineering of all of Apple's products. He played a crucial role in the development of Apple AirPods, obviously a massive success, and he redesigned Apple's computers to use company designed chips instead of Intel's, a massive move that extended battery life and improved performance. So Ternus is-

Speaker 2:
[16:41] And set them up very well for AI. AI. Yeah.

Speaker 1:
[16:44] Ternus is taking over Apple at a time when the company has largely sat on the sidelines of the AI race, going so far as to outsource the technology powering Siri to Google's Gemini. Ternus will have to somehow manage this dynamic. Ben Thompson wrote about it in November of 2025. Apple's plans are a bit like the alcoholic who admits they have a drinking problem, but promises to limit their intake to social occasions, namely how exactly does Apple plan on replacing Gemini with its own models when, one, Google has more talent, two, Google spends far more on infrastructure, and three, Gemini will be continually increasing from the current level.

Speaker 2:
[17:24] A number of people have talked about one of the challenges that Ternus is inheriting on the supply chain, right? Kind of like stock in China in a big way. That presents a pretty meaningful risk to the business, and then sort of like overall dependency on Google, especially on some of these key products. And we will close out on this. I need your reaction. John, Ferrari's first electric car is priced at the low price of $650,000.

Speaker 1:
[17:54] An absolute steal. They're giving them away at that price. It's electric, right? So you don't have to deal with gasoline? You don't have to deal with all the noise that comes out of a V12.

Speaker 2:
[18:07] Yeah, no noise and you save on gas.

Speaker 1:
[18:09] Yeah. Well, yeah, if you're saving on gas and you're driving, I mean, if oil keeps spiking and gasoline goes to $1,000 a gallon and you're filling up every week, you could easily be spending millions of dollars a year on gasoline in a normal car. So there's potential cost savings here. So it's sort of a more you buy, the more you save situation, I think, Ferrari, Luce.

Speaker 2:
[18:35] There's really going to be a like, what kind of Ferrari client are you moment?

Speaker 1:
[18:40] No, I think it'll be a status symbol. Because if you see someone with this, you will know.

Speaker 2:
[18:43] They can eat 300 grand of depreciation.

Speaker 1:
[18:46] And you know that they are high on the list for the F90. They are working their way up, buying in now. And when the F90 comes out in a decade, they're getting a call. They're getting a call.

Speaker 2:
[18:58] Yeah, very interested to see how this does in the market. And the good thing is if you are excited about the Luce, but you're not excited about paying $650,000, you will have an opportunity to buy them for far less than that very, very quickly.

Speaker 1:
[19:13] Probably, probably.

Speaker 2:
[19:14] But thank you for hanging out with us today. It's been an honor and a privilege to be here with you. We hope you have a wonderful afternoon.

Speaker 1:
[19:20] Leave us five stars on Apple Podcasts and Spotify. Throw that flashback. Sign up for our newsletter, tbpn.com. Goodbye.