Why We’re More Optimistic About Apple’s (AAPL) Future

By Gene Munster

Yesterday, the Wall Street Journal published a report detailing changes to Apple’s senior management over the last year. We view these changes as positive because they position Apple (AAPL) for a new type of growth around Services and frontier technology.

Since the beginning of 2018, we have seen at least eight high-level changes.

  • John Giannandrea was hired from Google and quickly promoted to SVP of Machine Learning and AI Strategy.
  • Sam Jadallah, former head of a smart lock company and Microsoft VP, was recently hired to lead smart home efforts.
  • Bill Stasior, in charge of Siri since 2012, left that role but remains at Apple.
  • Angela Ahrendts will leave the SVP of Retail role.
  • Dierdre O’Brien was promoted to SVP of Retail + People.
  • Frank Casanova was chosen to head augmented reality marketing.
  • Doug Field was (re)hired from Tesla to work with Bob Mansfield on Project Titan (autonomy).
  • Jamie Erlicht and Zack Van Amburg, former Sony Pictures executives, were hired to head up Apple’s original content efforts.

This quickening of management changes is notable, given the relatively few changes between 2011 and 2017, detailed below:

  • Ron Johnson, former SVP of Retail Operations, departed in 2011.
  • Scott Forestall, former head of iOS software, left in 2012.
  • John Browett, who assumed Ron Johnson’s former role, also left in 2012 after only nine months.
  • Eddy Cue assumed leadership of a broader set of Apple’s Services.
  • Jony Ive was promoted to the newly created role of Chief Design Officer in 2015.

The apparent acceleration in the pace of change within Apple at the executive level reflects the paradigm shift the company is undergoing from a hardware-driven story to Apple as a Service. To successfully capitalize on new opportunities, Apple needs a very different set of skills. To that end, we view these changes positively because they align Apple more with the frontier tech trends that we believe in and invest in: artificial intelligence making products and services more useful, augmented reality and smart devices changing the way we interact with machines, lower barriers to building and distributing creative content, and autonomous systems including vehicles.

On one hand, the changes reflect that the previous leadership team was not properly positioned for the future. However, Apple’s willingness to aggressively address the issue and make what we view as the right changes leaves us more optimistic about the company’s future. We still see leadership gaps in both healthcare and autonomy, both of which represent some of Apple’s largest untapped opportunities for future growth.

Disclaimer: We actively write about the themes in which we invest or may invest: virtual reality, augmented reality, artificial intelligence, and robotics. From time to time, we may write about companies that are in our portfolio. As managers of the portfolio, we may earn carried interest, management fees or other compensation from such portfolio.


Write a comment