1. Fix the AI strategy
Artificial intelligence has been a surprising weakness for Apple, at least in the eyes of some investors. It has stood on the sidelines as Microsoft, Google, Meta and Amazon have poured hundreds of billions of dollars into AI development. Instead, Apple has preferred partnerships and announced in January that its AI tech will be based on Google’s Gemini, including in a revamped version of its voice assistant, Siri.
Dan Ives, an analyst at the US financial services firm Wedbush Securities, said: “We can’t say it enough but Apple cannot watch the AI era from the sidelines as this 4th industrial revolution takes hold. In essence, Apple is a toll collector on the consumer AI highway and Ternus needs to finally get the AI strategy right.”
2. Diversify away from the iPhone
This is something of a counterintuitive challenge for an executive who has received plaudits internally and externally for overseeing recent iPhone model launches. It is also not a new quandary. The iPhone, one of the signature consumer products of the 21st century, represented just over 50% of Apple’s $416bn in sales last year and has 1.5 billion active users worldwide. Nonetheless, the market is saturated and highly competitive.
“They need to diversify away from the iPhone and make sure it no longer represents 50% of their revenue,” said Thomas Husson, an analyst at Forrester Research.
Ternus will be looking at what OpenAI produces from its collaboration with iPhone designer Jony Ive. Apple is expected to launch a foldable iPhone and has reportedly explored personal robotics as a new product offering, while an Oura-style ring could be another option. Ternus, however, does not have a reputation for taking big swings.
Ives said: “Innovation going forward around foldable phones, an AI-enabled smartphone, new sleeker/affordable Apple Glasses, and future hardware developments will be the hearts and lungs of Apple’s success. While we can talk about supply chain, political navigation, and branding … it comes down to innovation and this will define the future of Apple and Ternus.”
3. Deal with the geopolitics
Apple has all the diplomatic, political and regulatory issues one would expect for a $4tn company whose products are in billions of people’s pockets and homes. Cook has managed his relationship with Donald Trump carefully and Ternus will have to do the same, given the US president’s tariff policy and his repeated calls for Apple to bring back iPhone manufacturing from China to the US.
Apple also has to maintain a relationship with China, its third largest market behind Europe and the US and where it assembles the majority of its iPhones. Europe and the UK are also putting regulatory pressure on Apple over its app store, long a bugbear of developers who resent the cut it takes on app and in-app purchases.
Husson…
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