Abstract:
New Apple CEO John Ternus has begun reshaping the iPhone maker just weeks after taking office, hoping to speed up product development, expand its device lineup and create a leaner, more engineering-focused organizational structure. People familiar with the matter said that Ternus has discussed relevant plans internally with colleagues, and initial ideas include reducing reliance on the traditional spring and fall product release cycle and eliminating some middle management positions to reduce the management layers between engineers and executives.
Ternus believes that in the era of artificial intelligence, if Apple wants to remain competitive, it must launch products faster and make bolder attempts in product development.
Apple CEO John Ternus
People familiar with the matter said the company has launched cost-cutting initiatives. As growth in the services business slows, Ternus is also looking for new revenue sources and trying to get more revenue from existing products.
Apple plans to launch a slew of new products next year, including camera-equipped AirPods, its first smart glasses, and a redesigned iPhone to commemorate its 20th anniversary.
Ternus is also considering adjusting the timing of product releases. Apple's product and engineering teams have spent much of the past decade working around big fall events, with the occasional new product launch in the spring.
Ternus hopes the company can launch products more frequently, not just in spring and autumn, but at any time throughout the year. However, employees said that changing Apple's long-term development methods is not easy and may take years.
Ternus, 51, has advocated streamlining organizations for years. When he was in charge of hardware engineering, he said at an all-staff meeting that Apple should reduce hiring, let existing engineers take on more work, and cut organizational redundancy. He also presented a graph of annual headcount growth, arguing that companies should get more done with fewer workers.
This concept is similar to the fast-paced culture of Silicon Valley companies such as Meta and Google, which has begun to take hold within Apple.
In the past two weeks, Apple's hardware engineering department has begun to lay off some engineering project managers (EPM). This position has been a central role in Apple's product development process for decades, responsible for managing timelines and coordinating work between different teams. The change affects a number of project managers, including about six director-level employees, a higher-ranking rank within Apple.
These employees were given just a few weeks to find other positions internally. Those who fail to find new positions will be laid off later this year. Such layoffs were uncommon at Apple in the past, but have become more frequent in recent months.
Apple is reported to have made small-scale layoffs across multiple teams and scaled back or canceled projects at earlier stages of product development, especially those deemed to have little contribution to profits.
Apple Park
Relevant actions include significant reductions in personnel for Siri, Vision Pro headsets, and AI-related software engineering teams, with some adjustments related to employee performance. Apple also recently made small cuts to its Fitness+ team, which had been developing audio-only versions of fitness classes.
In addition, Ternus is also studying how to use AI to speed up product development and take over some of the work currently done by employees.
This summer, Apple formulated a plan to consider laying off about 5,000 AppleCare customer service staff, including many employees who work from home. The plan is based on the assumption that more sophisticated AI phone and web agents can take over some of their jobs. But the company ultimately shelved the plan and is not currently prepared to take this step.
Still, many employees believe further layoffs are possible later this year or early next year. In early planning for 2027, several departments originally considered the possibility of increasing budgets and headcount. However, in some departments, the planned budget increases have been reduced, while the staff size has remained unchanged year-on-year. Other teams have also been asked to cut marketing spending.
The shortage of memory chips affecting the entire industry has pushed up the cost of key components. Apple has raised prices to offset the higher costs, but they do not want to see consumers leave due to high prices, so at least for now, Apple has chosen to absorb part of the cost on its own.
Managers in product development departments are already feeling the pressure of the accelerated pace. “Everything is more hands-on now than in the past, and it’s very hectic right now,” said one person familiar with the matter. Managers on product development teams are being asked to launch more products in shorter cycles and with greater frequency, that person and others said.
As the growth rate of Apple’s services business slows down and the App Store’s business model comes under pressure, Ternus, head of services business Eddy Cue and chief financial officer Kevan Parekh are also looking for new ways to increase revenue. , they discussed launching new services and generating more revenue from existing products and services.
Meanwhile, cost cutting will continue. For upcoming company holiday parties, some teams have been told that for the first time in years, employees will no longer be allowed to bring chaperones.
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