Prediction

"Apple’s new boss needs to restore its magic for the AI era"

If Mr Ternus does “nothing but keep the ship on course”, Apple could almost double its number of devices from 2.5bn globally to 4.5bn over the next 15 years, reckons Horace Dediu, a veteran Apple analyst. That would be a huge platform on which to run—and monetise—AI apps. As users subscribe to ChatGPT or other AI apps, “Apple will just take a cut,” Mr Dediu adds. By one estimate, Apple is close to generating $1bn in ai revenues so far this year via the App Store, despite having no flagship ai product.

Azeem Azhar, author of Exponential View, another newsletter, adds that to overcome bottlenecks in cloud-based AI, routine queries may be shifted to “edge” devices, creating a big opportunity for Apple. In Mr Azhar’s telling, the future will involve “a combination of the highly portable phone with the persistent desktop or server. Both play to Apple’s strengths.”

There is, however, a more radical path available to Mr Ternus, which is to develop a new “form factor” beyond the iPhone that is more suitable for the interactive nature of ai than doomscrolling on a touchscreen. Competitors are already trying to turn the smartphone into yesterday’s technology. Meta, the social-media giant run by Mark Zuckerberg, is selling millions of AI-powered smartglasses. Sir Jony Ive, the design guru who helped Jobs create the iPhone, has teamed up with OpenAI to develop a brand new gadget of unknown form. To keep up, Mr Ternus may have to reinvigorate Apple’s product line-up with a determination that eluded Mr Cook.

Apple’s Vision Pro virtual-reality headset, though an over-priced flop, may help the new boss develop Apple smartglasses. The company is also reportedly working on a wearable AI pin. Mr Dediu says that one of Mr Ternus’s main strengths may be his devoted following among Apple’s engineers, who have been pivotal to the firm’s success. “Ternus will come out as an engineer’s engineer,” he says. “He is hard-core. That might energise the teams.”

Source: The Economist

NB: As is often the case, a 45 minute discussion turns into two sentences. The article sadly does not provide hints at the future direction of the company. But we can…

…What we can foresee with certainty is what I said: the momentum is there for a doubling of the business without any new initiatives. The cultural fit for Ternus is 100%. That is based on the data we have but it is not the limit of what can be done. It is up to Apple to create the future.

This is not about AI or any new form factors but about harnessing the new technologies with Apple's existing operational capabilities and existing market access in a way that competitors cannot replicate. Thus unforeseen growth can be created and, by definition, it's not possible to tell what that may be.

But I can foresee that the organization is robust and well managed enough to create this unforeseen growth.