What's Next For Apple After Tim Cook Steps Down?

Tim Cook announced his departure as Apple CEO today, effective September 1st. John Ternus—Apple's Senior Vice President of Hardware Engineering—will take over. Cook's tenure as CEO of Apple began in August 2011. In his fifteen years at the helm, Apple's stock is up 1,886% with its market cap taken from $400 billion to $4 trillion.

This sounds staggering, and objectively it is. But if you look at Apple's competitors during the same time period, Apple's growth actually trails. Google, Microsoft, Tesla, and Netflix all beat it, and Meta was close behind. In fact, despite the appearance of massive success in Cook's time heading Apple, many in the tech community in particular see it as a period where Apple rested on its laurels, stopped innovating, and enjoyed monopoly rents while obsessively maximizing economic efficiencies.

Cook's Legacy

When Tim Cook became CEO in 2011, the iPhone had already taken over. The iPad was well-established. Since 2011, Mac has gone from 20% of Apple's revenue to 8% today, even after Apple released revolutionary custom hardware to power all its Mac devices that the PC side of the market still can't compete with.

Apple's "What is a Computer?" commercial basically lays out the company's hardware strategy for the past 15 years. They pivoted into a phone company in a brief period where they had first mover advantage on a momentous technology that was about to change the world. This new segment has been unbelievably lucrative, and not just from phone sales. As the proprietor of a brand new technology, Apple was able to bring a new kind of computer to market that the company could lock down far more than any consumer would tolerate for a traditional desktop or laptop. And so, when the App Store launched in 2008, it launched with a 30% commission on all revenue made from iPhone apps with no option to "side load" apps outside of the market (until the iPhone, "side loading" was just "installing).

And so, on top of Apple's $200B in revenue from iPhone sales each year, Apple has earned another $100B in commissions from the App Store. But with recent seismic antitrust judgment against it, Apple's free lunch is finally over. App Store commissions have been reduced to 15% and now Apple must allow companies with apps to direct their users off-app to make purchases (which net Apple a 0% commission).

Without an NDA and some real connections, we can't know all of the inner workings pushing Apple into the Ternus Era, but it's quite likely the massive change in the rules of play resulting from Epic Games v. Apple has played and will play a role. The company has to innovate again, or else persuade its shareholders to be content with rapid degrowth in Apple's second largest revenue source.

Still: under Cook, Apple's innovation firepower dimmed. iPhone 15 looks like the iPhone 14. Siri is still terrible. Apple's AI strategy is years behind OpenAI, Google, Microsoft. Vision Pro launched at $3,500 with a processor that can't run new games.

All-In on Hardware

All of this makes the decision to elevate Ternus, the hardware engineer who presided over Apple's creation of the M and A series silicon, a smart and promising move. If Apple is going to begin innovating again, it needs to be on the hardware side. It presided over the 15-year making of a closed software ecosystem where users expect most apps to be free and, with the advent of AI, the marginal value of any software is deeply uncertain.

By going all-in on hardware now, Apple can position itself as the picks-and-shovels salesmen of the AI goldrush, just as it was the picks-and-shovels salesmen of the mobile software goldrush. Apple is uniquely positioned to become a competitor to NVidia (currently by far the largest company in the world by market cap solely from selling GPUs for AI data centers) with its powerful custom silicon and unified memory architecture—perfect for AI compute.

Tech right now is chasing AI, and Apple has missed the boat under Tim Cook's leadership. Apple had (and still has) an unbeatable edge in local processing, on-device inference. Then it shipped essentially nothing while OpenAI, Google, Anthropic, and xAI went off to the races. But Apple doesn't have to compete with any of them. Its actual AI advantage isn't Transformers or LLMs—it's Apple Silicon.

Oh, The Possibilities

Many digital independents use Apple hardware. MacBooks are the ubiquitous symbol and tool for professionals wanting to convey success while actually being productive. Microsoft raced to AI-ify everything in Windows, to near universe disapproval. Do consumers not want AI, or do they not want AI poorly implemented and hamfisted into every part of their operating system?

Apple may find out. They have a long history of virtually never being the first to do anything, but virtually always doing it "the best." Can Apple figure out the right amount of AI to pack into a consumer OS?

Or will Apple finally break into enterprise infrastructure? NVidia went from a niche hardware company for gamers to the most valuable company in the world on the rising value of enterprise AI compute. It doesn't have a moat, it just doesn't have competition yet. AMD has not proven up to the task. Maybe Apple will.

A sober note: Ternus won't suddenly turn Apple into a revolution shop. The board promoted the guy who rose to the top in the system that existed, not a wild card. Organization stays the same. Market dynamics stay the same. The iPhone still pays the bills.

What probably shifts is Apple's appetite for hardware bets, products that push engineering, and maybe an AI strategy that works within Apple's architecture instead of fighting it. Apple put someone in charge who cares about hardware design, not just efficient supply chains and economies of scale. We will see whether that becomes a meaningful change for Apple users.

For the first time in fifteen years, there might be actual surprises. In a company as historically conservative with its massive stockpiles of cash as Apple, that's something I'm hoping to see.