Apple Executive Shake-Up Readies It for Life After iPhone
Apple Executive Shake-Up Readies It for
Life After iPhone
Shifts reflect Apple’s efforts to change from an
iPhone-driven company to one where growth flows from services, potentially
transformative technologies
By Tripp
Mickle Updated Feb. 18, 2019 12:59 p.m. ET
Apple Inc. is
shaking up leadership and reordering priorities across its services, artificial
intelligence, hardware and retail divisions as it works to reduce the company’s reliance
on iPhone sales.
The changes, which can be traced back to last year, have
included high-profile hires, noteworthy departures, meaningful promotions and
consequential restructurings. They have rattled rank-and-file employees
unaccustomed to frequent leadership changes and led Apple to put several
projects on hold while new managers are given a chance to reassess priorities,
according to people familiar with the matter.
The primary reasons for the shifts vary by division. But
collectively, they reflect Apple’s efforts to transition from an iPhone-driven
company into one where growth flows from services and potentially
transformative technologies.
Leadership moves of the past few months include promoting
artificial intelligence chief John Giannandrea to the executive team; replacing
departing retail chief Angela Ahrendts with head of human resources Deirdre
O’Brien; and pushing out top Siri voice-assistant executive Bill Stasior.
Apple has also trimmed 200 staffers from its
autonomous-vehicle project, and is redirecting much of the engineering
resources in its services business, led by Eddy Cue, into efforts around
Hollywood programming.
Eddy
Cue, who had been Apple’s sole head of services, is focusing much of his
engineering team on developing the company’s media offerings, including Apple’s
coming Hollywood programming.
“This is a sign the company is trying to get the formula
right for the next decade,” said Gene Munster, a longtime Apple analyst and
managing partner at venture-capital firm Loup Ventures. “Technology is
evolving, and they need to continue to tweak their structure to be sure they’re
on the right curve.”
The changes, along with Apple’s recent sales woes, have
become conversation fodder for current and ex-Apple employees, partly because
they are among the most pronounced since Tim Cook’s early years as chief
executive. Retail chief Ron Johnson left shortly before Mr. Cook took over in
2011, and mobile software executive Scott Forstall was dismissed a year later.
Their departures led to the hiring of Ms. Ahrendts, the elevation of Craig
Federighi to the top software job and Mr. Cue’s assumption of responsibility
for several services, creating an 11-person executive team that remained
largely unchanged for five years.
The competitive landscape could complicate Apple’s efforts
to diversify beyond the iPhone. Media services like Netflix Inc. and
Spotify Technology SA have a head start and more subscribers; Google’s
autonomous-vehicle initiative has logged more miles on the road; and Amazon.com Inc.’s Echo
speakers have put Alexa into millions of homes.
Apple spent $14.24 billion on research and development
last year, a 23% increase from the year prior. Though it continues to work on
projects in the augmented reality, autonomous vehicle and health sectors, it
hasn’t yet released a major new product in those areas. Sales of its latest
gadgets—Apple Watch, AirPods and HomePod—have been mixed, and none has offered
the pricing power or volumes of the iPhone, one of the best-selling products in
history.
Apple’s
focus on services coincides with a decision to replace its retail chief, Angela
Ahrendts, after her five years overseeing 500-plus Apple stores world-wide.
Mr. Cook, who prides himself on his long-term management
focus, has been anticipating the maturation of the smartphone industry since as
early as 2010 and planning for how to grow as phone sales slow, former
employees say. Apple this year stopped reporting the number
of iPhones it sells, a move many observers interpreted as an end of
the smartphone salad days.
Though the iPhone still contributes
about two-thirds of Apple sales, the company has encouraged investors to focus
on a growing services business, which includes streaming-music
subscriptions, app-store sales and mobile payments. Services are expected to
top $50 billion in sales by fiscal 2020 and contribute more than about 60% of
Apple’s total revenue growth over five years, according to Morgan
Stanley , which
estimates the iPhone fueled 85% of growth during the prior five years.
The
services business also is key to preserving iPhone loyalty. Just as Amazon has
used media and music offerings to increase the value of Prime membership, Apple
executives view its mobile payments, music service and coming video offering as
ways to encourage current iPhone owners to buy future Apple handsets.
Apple has said it aims to pass 500 million paid
subscriptions across its platform by 2020, up from 360 million now.
To help reach the goal, Apple is spending more than $1
billion to create original shows this year starring Hollywood A-listers such as
Reese Witherspoon. It has considered bundling video into a monthly subscription
offering that would also include cloud storage, according to people familiar
with the plans. The company also is in talks with major newspapers
about offering a news service that would cost $10 a month. It
has discussed bundling those services together into a single subscription along
with iCloud storage for photos and files, a person familiar with the plan said.
Mr.
Cue, who poached two top executives from Sony Pictures Television in 2017, has
focused most of his engineers on the coming video offering, two of these people
said. The company is pushing to announce the new offering at a media event
scheduled for March 25 on its Apple Park campus, people familiar with the event
said.
Apple is also expected to lean on its
artificial-intelligence team to personalize the services on people’s devices.
The company last year hired Mr. Giannandrea away
from Alphabet Inc.’s Google, where he held a similar role
incorporating AI into products like Gmail’s inbox app.
In December, shortly after presenting to Apple’s board,
Mr. Giannandrea was promoted to the company’s executive team and quickly took
over the AI division. He relieved Mr. Stasior from his responsibility
overseeing Siri, Apple’s flagship AI product, according to people familiar with
the change. Mr. Giannandrea has assumed that responsibility and is looking to
improve Siri’s accuracy and performance, the people said. The Information
earlier reported on Mr. Stasior’s status.
In
August, Apple hired Tesla Inc.’s engineering chief Doug Field and gave him
day-to-day responsibility for the company’s roughly 1,400-person
autonomous-vehicle project, known as Project Titan. Last month, he cut the team
by about 200 people, according to people familiar with the change, which was
previously reported by CNBC.
Apple announced in early February that Ms. Ahrendts would leave the company in
April, ending a five-year stint overseeing its 500-plus stores
world-wide. Mr. Cook promoted Ms. O’Brien, a longtime operations executive,
into a role of completing Ms. Ahrendts’s store remodelings and determining how
Apple promotes services in stores. One planned initiative: Apple has promised
production partners in Hollywood that it will install TVs in stores to showcase
its slate of forthcoming shows, people familiar with those plans said.
Comments
Post a Comment