The Economy Chosun Interview Part 2

At the Interface

For Part 1 click here.

See also this interview with Chosun Daily from 2013: https://asymco.com/2013/04/22/interview-with-chosun-daily-of-korea-about-apple/

1. Apple’s 50th anniversary is a moment of celebration, but also a moment for reflection. What is the biggest weakness Apple needs to examine most soberly right now? Among its dependence on manufacturing in China, tighter regulation, the maturity of the smartphone market, and intensifying AI competition, which do you see as the greatest source of pressure going forward? In the AI era, Apple appears to be a late mover, and there are concerns that the longer tensions with China and broader geopolitical strains persist, the weaker Apple’s competitiveness could become.

On geopolitical and supply chain challenges, these are, in my opinion, management challenges. That is to say that they are resolved by the skill (and luck) of the people involved. They are resource and process questions not ones of priorities. Apple has an amazing team in charge and many say that is their “secret sauce” or their superpower. I would say the team is super important but it’s also a system at work.

AI is however a strategic question. AI is a dramatic new technology which might enable disruptive change. Apple has been cautious. As I pointed out with the three key management tenets (user dedication, focus on advantage, integration/modularity,) AI does not meet the criteria for investment. It might prove very wise to proceed cautiously but it may also be a big vulnerability. If AI is an infrastructure, like networking, open source or search, Apple would be good to partner and wait for commoditization. If AI becomes a platform with user lock-in and sustainable advantage for model builders and hyper-scalers then it can be dangerous.

1. What is the next strategic move Apple needs to make in order to remain one of the world’s most influential technology companies? Do you think the strengths that shaped Apple’s first 50 years will still work for the next 50, or does it now need an entirely different formula for success? Looking ahead, which area do you see as the most important pillar of Apple’s next decade: AI, healthcare, spatial computing, semiconductors, or services?

Apple has always ended up, either deliberately or accidentally, at the interface between man and machine. It’s a critical location that gives a very strong control over the entire tech stack. When looking forward I always ask what will be the future of the man/machine interface. If that interface is passive (as in audio or ambient computing) then Apple does not have a “design surface” on which it can add value. If it’s engaging (as in Spatial or Immersive Computing) then Apple has an even bigger “design surface”, namely the entire physical world, on which it can add value.

The debate today is whether AI creates a new passive computing world where agents whisper in your ear while watching and listening through wearable pendants, buttons or badges or whether wearables mean we put lenses between us and the world so that all that we see and hear comes through a new computer. Apple could play in both worlds but it would have a lot more to say about the latter than the former.

Of course, it may be that the dichotomy is false and that the future is much more of the same and we will simply roll out mobile computing to all people on earth and there will be more than 10 billion devices in use of which Apple will provide a signification portion. That may be the case for decades in which case the smartphone will become even more important.

I think we have not reached saturation in either the number of users and in the types of usage that phones can offer. So it may be that perhaps the next 20 to 30 years are going to be “sustaining” to Apple. But something will change eventually.

1. Apple’s succession plan may be far more important than the market assumes. At this 50th anniversary juncture, do you see succession planning as one of the company’s biggest management challenges?

Briefly, no. The company has succession planning at all levels and is part of what Jobs built. One thing that hints in that direction is that board members are limited to age 65 and Tim Cook has reached the limit (though it can be extended). One alternative hypothesis however is that he's too valuable. Not so much as the manager but as the negotiator and as the diplomat. Because we live in such difficult times from a geopolitical point of view he somehow has managed, i don't know how, nobody knows how, even Warren Buffett recently pointed out that he thinks that's one of his greatest skills: that everybody likes Tim Cook.

That includes China that includes Trump that includes Europe. Somehow he gets along with everyone. So his ability to be the diplomat, will it be perhaps valued further? One possibility would be that he becomes executive chairman.

I always maintain if you study the company from a cultural point of view, you'll realize that there are people who cannot be CEO. You may not know who it's going to be, but I can tell you who won't be. Many people over the years suggested candidates, and I would disregard them. Here are examples. Johnny Ive would never be CEO. An external hire would never be CEO. Even a head of marketing would never be CEO. Many people think that Apple is a brilliant marketing company. No, it's an engineering company. This is a common misunderstanding.

If you look at the headcount, if you divide the employees by their job functions, you'll see that engineering is by far bigger than the next category, which would be perhaps marketing or operations. So what does that mean from a cultural point of view? It means that the people who are engineers want to have a boss who can listen and understand them.

And so the people who need to run Apple have to be competent with engineering. In the case of operations, it's acceptable because they are at least covering engineering as one of their constituencies. They have to bridge between manufacturing, design and distribution. Engineers respect operations. Engineers respect manufacturing. So in that sense, when you look at the candidates, I do think John Ternus is one of those who fits the bill. Of course, there could be many others as well.

1. Please let us know if there is anything else you would like to emphasize.

I come from an engineering or analytical background and I did my work always with a lot of data. But the more I study Apple, the more I think it needs to be analyzed culturally. It's a very difficult thing to do because we have no data about culture. We have only some anecdotes. But as an analyst you have to be humble and see that the data, perhaps that which is matters most, is not available.

When it's dark outside and you're searching with a lamp, well, that's the only area that you have light. but the truth could be in the darkness. And that area under the light, that's your data set. And the solution is somewhere else perhaps. That's why you have to have other tools than a lamp. What can we use other than looking at the light? We have to use all our senses. Use other perceptions.

And so that's why I think Apple is a peculiar thing. There is little data but a lot of perception. And so it turns out that the analysts out there who do try to move beyond data delve more into psychology--they tend to really study the man or woman involved. They'll study the personality as an alternative. So they'll say, well, the company's success depends on Zuckerberg, or Gates or Bezos. We have to know who he is so we can understand the company.

There are people who specialize in understanding that person but i don't think that helps with Apple. I think personality is important but you have to study the culture too. The whole way they do things internally. They give us plenty of hints; they say all the time that it's a team effort. They'll always say "no it's not me, it's a group effort”. Rarely do we study the groups.

1. Why do you think Apple chose John Ternus as its new CEO? Do you believe John Ternus is the right person to lead Apple? How do you expect Apple to change under his leadership?

I believe the choice was made because John Ternus was the most capable and most respected candidate at this time. I don’t know who were the candidates but I assumed it would be someone from engineering.  if you study the company from a cultural point of view, you may not know exactly who would be the next leader but you determine that there are people who cannot be CEO. Many people over the years suggested candidates, and I would have said no. Here are examples. Johnny Ive would never be CEO. An external hire would never be CEO. Even a head of marketing would never be CEO. 

Many people think that Apple is a brilliant marketing company. It is, but culturally it’s an engineering company.

If you look at the headcount, if you divide the employees by their job functions, you’ll see that engineering is far bigger than the next category. Not only that but if there is a large turnover or competitors poach the best, then the company can be damaged severely. So what does that mean from a governance point of view? It means that the people who are engineers want to have a boss who can listen and understand them. And they don’t think that someone who’s from marketing is going to be able to understand them because they don’t have the cultural and the educational background or the mentality around engineering. I think Tim Cook knew this and the board knows this. 

And so the people who need to run Apple have to be competent with engineering. In the case of operations, it’s one of those acceptable categories because they are at least analytical. So they have to be a bridge between manufacturing, distribution, and engineering. So engineers respect operations. Engineers respect manufacturing. So in that sense, when I looked at the candidates over the years, I did think John is one of those who fits the bill. Of course, there could be many others as well. 

Regarding expectations, I wrote my thoughts in this post:https://asymco.com/2026/04/21/john-ternus-has-left-big-shoes-to-fill/

The premise of this post is to take a look at John’s tenure from the point of view of 2040 when I expect him to retire. It is written in the style of a post by a mainstream financial news publisher. 

To summarize, I don’t think Apple will change much culturally but the strategy might shift toward gaining more share of global active devices. I believe he can put a plan together that reaches 40% (4.5 billion) of the world’s personal devices.