Abstract:
John Ternus will take over as Apple CEO on Tuesday, replacing Tim Cook. Today, Apple stands at the top of the industry. This is both Ternus' greatest challenge and his most important opportunity. Taking over the company on Tuesday, which is the world's second-largest company by market value and valued at nearly $5 trillion, the starting point is already so high. It will be difficult for Apple to continue its previous unstoppable growth momentum.
John Ternus will officially take the helm of Apple on Tuesday
Industry observers say that since the end of the Steve Jobs era, Apple has been missing one key thing: reigniting the company's innovation engine.
Tim Cook’s excellence is that he has achieved the ultimate scale of the Apple foundation laid by Jobs. In the year when Cook took over, Apple sold 72 million iPhones; and according to estimates from Counterpoint Research Institute, iPhone sales this year will reach 255 million.
During his tenure, Cook tripled product sales, strictly maintained the pace of annual product updates, strictly controlled high-risk capital investment, and returned more than $1 trillion to shareholders through dividends and stock buybacks, driving Apple's market value to 13 times its original value.
Of course, Apple has not completely stopped innovating. The annual sales volume of Apple Watch has exceeded the entire size of the Swiss watch industry; the sales volume of AirPods is comparable to the commercial scale of Major League Baseball. In addition, Cook has also vigorously expanded the service business territory, which includes both App Store sales revenue and the billions of dollars in revenue paid by Google to Apple.
But in Wall Street jargon, these benefits have all been reflected in the stock price. Apple currently trades at 33 times next year's earnings, while the S&P 500 as a whole trades at just 20 times earnings. Even if Apple's profit growth rate is only half that of the broader market, it still gets such a valuation premium.
Moffett Nathanson analyst Craig Moffett said that the current market is generally concerned about whether huge investments in AI can bring returns. Investors are willing to pay a high premium for Apple because they value Apple's relative stability and security. "But when the valuation bubble is inflated, the so-called safety is no longer safe." Moffett said.
At the same time, some hidden risks are being ignored by investors. Entering the age of artificial intelligence, Apple has lost the industry position it had held for the past 40 years, from the Apple II to the iPhone, as a leader in defining how consumers interact with devices. Nowadays, companies such as OpenAI and SpaceX are building a new generation of hardware devices specifically designed for AI, leaving Apple in a passive position.
The AI wave has also dealt Apple another heavy blow. Apple is no longer the number one purchaser of core components. Major AI cloud giants have spent huge sums of money on chip manufacturers, squeezing out the chip production capacity Apple needs. This not only drives up Apple's production costs, but also increases the prices of some models such as Macs and iPads. Insufficient production capacity also causes product shortages and cannot meet consumer demand.
Another major supply chain problem hanging over Ternus’ head is Apple’s continued dependence on the Chinese market. With his superb political mediation, Cook has generally resolved the pressure of the Trump administration; after leaving office, Cook will continue to handle key foreign political relations as executive chairman. But the fundamental contradiction has not been eliminated: most of Apple's supply chain is located in this country that has long been in a trade dispute with the United States.
On the other hand, a California judge has successively made rulings to reduce the high commissions that Apple has long relied on in-app purchases. Apple's rapidly growing service business has been significantly constrained. App developers can now charge users through their own websites to avoid Apple’s cut of up to 30%. Appfigures estimates that Apple’s App Store commission revenue in the U.S. market fell 6% in the fiscal quarter of June this year.
Still, when Ternus takes the stage for the first time as Apple CEO on September 9, he can still be confident that the popularity of Apple devices has reached new heights. Even though the iPhone 17 Pro is lacking in AI functions, its stronger camera, battery life, and new orange color scheme that looks a bit strange are enough to drive sales and set a sales record.
Mac computers are also experiencing a renaissance in the AI era. Apple's self-developed chips are very suitable for running large language models on the desktop, which has also caused demand for Mac products to exceed supply.
At the first iPhone conference hosted by Ternus, Apple will also show off a trump card: the folding screen iPhone. It is not the first foldable phone on the market, but IDC (International Data Corporation) predicts that by the end of 2027, Apple will capture 40% of the market share of foldable screen phones, almost dominating the entire market.
Apple has a large and highly profitable user base around the world, and a large number of users are eagerly looking forward to experiencing more powerful AI assistants. Apple has pushed out a software update, claiming that the new assistant can complete more tasks. Early actual testing shows that its response speed to complete commands is still lagging behind competing products; however, with the support of Google's back-end technology, Siri has completed a major upgrade and evolved into a modern conversational chatbot.
If Ternus can further speed up Siri's response speed, it can convince third-party application developers to open service interfaces, allowing iPhone users to directly use natural language commands to call various services without having to repeatedly jump and switch apps. So, even if Apple currently lags behind in the field of AI, it is expected to become a company that can truly bring this technological revolution to a large number of ordinary consumers.
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