Apple CEO Eyes Faster Product Releases, Fewer Middle Managers

0:02 Bloomberg Audio Studios.

0:04 Podcasts.

0:05 Radio. News.

0:08 You're listening to Bloomberg Business Week with Carol Masser and Tim Stenevek on Bloomberg Radio. Let's talk about Apple.

0:17 Let's do it. Apple CEO John Turner is just weeks into the role as moving to overhaul the iPhone maker. It's all about an effort to accelerate product development, broaden its range of devices, also create a leaner Leaner and leaner, perhaps. Organization with a greater focus on engineering. I've got to say, this Bloomberg exclusive is among the most read stories on the Bloomberg today. And let's get to the reporter who got the details first. Back with us, Bloomberg News Managing Editor for Global Consumer Tech. He is Mark Gurman. He is in the Bloomberg. LA News Bureau. He's also host of the new Power On podcast launching this Thursday. You can subscribe to also the Power On newsletter. You can

0:55 find that on the Bloomberg and at Bloomberg.com. You're a busy dude. This story, Mark, as I said, among the most read. What did you find out about John Ternes? Is this just about making his mark on the company?

1:07 Yeah, first of all, let's just talk about the podcast for a second, if I may. I'm really excited for it. It's going to be my first podcast. It'll be every Thursday on all the podcast networks. On YouTube, we'll have video as well. Going to have a lineup of some great guests over the next several months and hopefully far longer than that. So I encourage everyone to subscribe and listen.

1:29 So thanks for giving me this opportunity to talk about it.

1:32 Well, you know what I was thinking, Mark? I was thinking you don't really have enough to do. So you should add some more stuff to your repertoire.

1:39 What does Ryan Seacrest say? He has every job in L.A.

1:43 Yeah, exactly.

1:45 You're getting there. You're getting there. Yeah, you are getting there. And I prefer to listen to Mark Gurman. Hey, Mark, we'll talk a little bit more about the podcast. Congratulations on this. I'm looking forward to checking it out.

1:56 Yes, but Ternus, right? Let me answer here.

1:59 Oh, Ternus, exactly.

2:00 What's he up to?

2:02 Yes.

2:02 So he is going to be putting his mark on Apple. Obviously, it was run extremely well under Tim Cook the last 15 years, but that was a different business. That was a business focused on expanding the product portfolio, getting the iPhone and the other products into as many new markets as possible. This was about creating a services engine that's able to augment revenue from hardware. Ternus' Apple is about new products, new pipeline, new offerings, new looks, new designs.

2:30 And He wants Apple to go back to an engineering-driven culture. He wants Apple to go back to a culture where they're coming with major new product categories and innovations. He wants Apple to be a machine for experimentation and new types of products. He wants to launch new devices much more frequently. He wants to move away from the spring and fall product cycles that Apple has been locked into for a decade at this point. And he just wants to generally just move faster and leaner.

2:56 Layoffs.

2:56 There have been small rounds of layoffs. And what Apple likes to do are these tiny layoffs. where they can avoid having to file notices with governments and having to disclose these things. So they do them in very small waves, very small groups of people at a time, but they add up. So you've seen Big Vision Pro and Siri layoffs in recent weeks. Two weeks ago, this was a big one, they did a layoff in the hardware engineering division of engineering program managers, EPMs. It's a key way that projects are run at Apple. These are basically the project managers. So Apple got rid of a bunch of them.

3:29 including directors, which is a pretty senior role at the company. And if they don't find new jobs, they're going to be essentially terminated. So just leaner, leaner, leaner. The other thing, Apple was set to lay off 5,000 people. So the first mass layoff at Apple in maybe 30 years, 20 years at least, from AppleCare over the summer. But they iced that. They're not doing that at this point.

3:55 That's good to know because some of us lean on AppleCare.

3:59 I think we can still get the care.

4:01 That's true.

4:02 That's true.

4:03 Can we still get the care? When I heard about finding new types of products and so on and so forth, about looking for new sources of revenue?

4:12 A big part of it. They are scared about the services business at this point because services revenue is taking a hit. For the first few years of this European Union situation where they're trying to upend the App Store, You didn't really see much of an impact on Apple revenue and Apple profit. That's happening at this point. You are seeing developers using outside payment systems, outside payment engines, not reimbursing Apple like they said they would be reimbursed from developers who are not using the payment systems. So it's having an impact. You also have this ruling in the United States and the California court about the App Store rules. having to have a link out protocol as well.

4:50 So they need to find ways to augment the app store. And obviously with AI, the whole interface is going to change and app subscriptions, those are going to go away or become reduced in some fashion. So they need to find new services to sort of make up for the shortfalls they're going to start seeing on the app store.

5:04 Mark, maybe a service for a new piece of screen-free hardware for the wrist.

5:10 I don't know.

5:10 We'll see.

5:11 I'm alluding to your reporting from I believe it was last week.

5:15 I've thought, yes, no, I appreciate it. I've thought a lot about it, right? What would the Apple way to do this typically be? No subscription. You just buy the heart.

5:24 Hey, that would be great. I, but I'm.

5:27 The more I think about it, I think you're right, Tim. You're going to probably see them do a subscription. I haven't heard this, but I speculate that we're going to head down the subscription path here.

5:38 Mark, I want to go to continue on the new product idea because People who have been watching Apple for years are used to a certain cadence with product releases. And as you remind us all the time, the pipeline is like years in the making. If John Ternus wants to release products more frequently, when will we start to see the fruit of that labor?

6:02 Years from now. This is a company that's been described to me like a gigantic ship. It's very hard to move a ship when it's already moving, right? And it's going to take a while to turn this thing in a different direction, in a faster direction. But that doesn't mean you're not going to see a lot of new stuff.

6:21 I mean, we're going to see four new products in October. We're going to see the biggest new product category from Apple in a while, in a few weeks. That's the Smart Home Hub. More details tomorrow. You'll see a new Apple TV with Siri AI, a new HomePod Mini with Siri AI, and you'll see the touchscreen MacBook Pro later this year as well. That's going to be a big deal.

6:51 Stay tuned for more on those. But there's a lot more coming this year, and then you look at the pipeline for next year. Every Mac, a lot of iPads. Oh, excuse me, five new products this month because I forgot the revamped iPad Mini. How could I forget?

7:04 Don't forget about the mini.

7:05 Well, I'm assuming we're going to hear more of it or more about it on your Power On podcast.

7:12 The first episode is all about the smart home stuff because I think it's pretty significant. This is an area that Apple has basically sat on the sidelines for for a very long time.

7:21 Okay.

7:21 And they're finally entering it. And so I'm excited to take readers– excuse me, listeners– deeply into what's going on.

7:29 Mark, we are too. And it does launch this Thursday. He is Mark Girmes, Bloomberg News Managing Editor for Global Consumer Tech. Read about it and listen on the Power On podcast.