Today, I’m talking with Mark Gurman, who is the world’s best-sourced Apple reporter — both as Bloomberg’s chief Apple correspondent and the host of the upcoming podcast Power On.
Earlier this month, Apple hosted its annual iPhone hardware event, virtually every detail of which was reported ahead of time by Mark. But this event was special, for a number of reasons.
It was new Apple CEO John Ternus’ first major product launch since he took over for former CEO Tim Cook less than two weeks prior. It was also the debut of the iPhone Duo, Apple’s first foldable smartphone. The timing of those two things was not at all coincidental, as you’ll hear Mark explain. Apple takes these hardware events — and the stories they tell — extremely seriously.
This year’s story actually says a great deal about what’s happening at Apple, how Cook managed in wholesale leadership ranks over the past year, and how all of that might change Apple’s culture. Furthermore, what all that tells about Ternus’ plan to navigate Apple from what you might call the iPhone era into the AI era.
Okay: Bloomberg’s Mark Gurman on the future of Apple. Here we go.
This interview has been lightly edited for length and clarity.
Mark Gurman, you’re the chief Apple correspondent and the managing editor of consumer technology at Bloomberg. Welcome to Decoder.
Good to be here finally. Thanks for having me. And it’s been a while, so it’s good to catch up on all things Apple.
Yeah, I’m really excited to talk to you. Obviously, Apple just had its big event. They announced the iPhone Duo. It was John Ternus’s first event as CEO. This is a Decoder episode, so we’ve got a new CEO, and we’ve got a new org chart inside of Apple.
There’s been a lot of shuffling. You’ve been chronicling them very, very deeply over the past few years. Let’s just start with the event. I have a very basic question for you.
Sure.
Do you ever get nostalgic for a time when you didn’t know what was going to happen at the iPhone event?
Do I ever get nostalgic?
Do you ever wish that you, Mark Gurman, were about to be surprised?
Honestly, I never think about it that way. I’m just fixated on delivering the goods and delivering the news. And people love their Apple. People want to know everything that’s coming down to the last minute, so I’m here to provide it for them.
The thing with me, and I don’t know if most people know this about me, but I hope people know this about me, is that I’m a huge Apple fan through and through, and I’ve always been. And I’m so lucky to be able to cover a company that I love, a company that I am obsessed with, and a company whose products I use. There are so many people who cover companies that they couldn’t care less about. That’s not me.
So I do what I do because I love Apple and I love covering Apple. I love the community around it, and I love talking about it. And it’s always fun to get a peek at the future and help keep not only myself informed, but people informed around me.
That actually leads me to a lot of things because I’ve known you forever. We’ve been working in and around the same spaces forever. You got your start as an Apple blogger at the Apple rumor sites.
There’s a whole culture around Apple that has grown up and changed over the years, and you can trace it to different eras of hardware, to different CEOs, to different sizes of the company. This was the first event with John Ternus as CEO. Apple announced a big new product in the iPhone Duo.
Do you sense that the community is changing? How do you think that community has changed over the years? And do you think Ternus is going to lead to a difference in what that community feels like?
I have to say, this event really didn’t feel much different than a Tim Cook event. They felt pretty interchangeable. It could have been Tim up there introducing it. It could have been Ternus up there introducing it.
The one thing I will say that did feel slightly different is that Ternus came out swinging with a point of view on AI. The first thing he came out with was about the intelligent personal hub. Now, here’s the big difference between Tim Cook and John Ternus in terms of their management style. You’re inside Apple, you’re an executive, you’ll come to him with an idea, you’ll come to him with a viewpoint, a decision, an opinion, and he’ll just pepper you with more questions. He won’t make a singular decision in many cases. It’s very much communal decision-making, collaborative decision-making.
John Ternus, if you come to him and you want him to make a decision, he’ll make a decision. He’ll have an opinion. Now, you may hate his opinion; you may completely disagree with him, but he has a viewpoint. But that’s the big difference between talking to people about Ternus and Tim.
Ternus comes out talking about his view on AI. I may disagree with it. A lot of people may disagree with it. They may think the OpenAI or Anthropic approach is superior, but at least he came out and had a viewpoint.
Apple’s been at this AI game now for two years since they launched Apple Intelligence at WWDC in 2024, and it’s been a mishmash of things. They haven’t really come out with a very strong narrative and viewpoint, and they finally did. So, as I said, whether you agree with it or not, they did do that. And I thought that was a really interesting way to kick off the keynote.
All right, we’re just going to get into the weeds of Apple nerds disagreeing about things.
Okay, let’s do it.
I sat through that event, and I appreciated the same thing that you saw, which is, “Oh, we’re telling a story.” John Ternus is on the stage, and the first thing he’s doing is telling a story about this product and how it fits into the universe of technology. And then I took a beat, and I was like, oh, but they’re also just making sure that he’s successful at his first event by playing Apple’s greatest hits.
Because an “intelligent personal hub” is just a replay of Steve Jobs saying the iMac was the digital hub. At the very end of the event, Ternus said, “There’s one more thing, and it’s the iPhone Duo.”
There was just a part of all of that that, to me, felt like Apple saying, “Look, our new CEO can put on the clothes of the old CEO. He can do this same dance that you’re expecting.” Underneath it, what I felt was, to your point, that I don’t buy the story about the intelligent hub.
No, I don’t buy it either.
Because any of the things we’re seeing AI do are happening in cloud services. It’s the same week that Meta launched Muse, right?
Right.
You can feel what you want about Meta launching Muse, but Mark Zuckerberg is giving everybody 8GB of storage and 8GB of RAM in the cloud, and Muse can go do a lot of things that AI on the iPhone absolutely cannot do at this point in time.
I just felt like there was a part where they were playing it really safe with John by having him basically show up and be the new lead singer of Journey. You can’t get it wrong if you’re going to do “Lights.” If you’re going to show up on stage and do “Don’t Stop Believin’,” you’re going to be fine for a minute. And it’s all the stuff that comes after that’s going to really show his real personality. But it sounds like you thought that that’s his point of view.
Well, it’s a couple of things. At a very high level, Apple’s going to tell a story around what they have. If Apple invented ChatGPT, they would’ve invented ChatGPT, and they would’ve told a good story around that. Apple has gone as far as it’s able to, at least for now, on AI. So it’s telling the story, the best version of that story that they can with what they have to work with, with the bird they have in hand. So that’s the one thing.
I agree with you on the intelligent personal hub, and how that compares to the iMac back in ’98. And it feels like they’re trying to sell this pivot from the Mac as the center of everything with the peripherals around it; then you got to iCloud in 2011, the center of everything with the peripherals around it. Now, it’s this Intelligence right at the center with everything around it.
But what’s so fascinating is that Apple held a major product launch event in September of the year 2026 and did not introduce a single notable new AI feature. The first 15 minutes or so of the keynote was simply a replay, a re-narrativization of what they introduced over the past two years with Apple Intelligence. And so they tried to just tell that story in a more concrete way.
The other thing is they don’t have any AI devices at the very core, and so they need to prop up the iPhone as their AI device because they don’t have an alternative. But of course they’re only going to do that until they have that killer device, and then they’re going to change that whole narrative.
So it’s a very narrative PR and marketing-driven company. And I’m not saying that to be critical. I mean, if I ran the company, obviously I’m going to tout what I have. I’m not going to veer from that. But it is interesting how they’re playing this. And I agree, they did play it very safe. There’s nothing safer than John Ternus introducing a new iPhone. It’s like the safest thing you can do. No major new AI product, no smart home hub, nothing in the spatial space, just straight down the middle.
Yeah, it seems like that next wave of smart home products, which we’re expecting later this year… I say, “We’re expecting.” I’m expecting it because that is something you have reported.
[Laughs] I am expecting it, yes.
Mark Gurman is expecting new products from Apple. That is the first cut at some truly AI-native devices. Because you have Siri AI and it is functional now in a way that it previously was not functional, you can try some new classes of devices.
There are about a half dozen AI-native devices coming in the next year and a half or so. The first will be the smart home hub, which is basically an Amazon Echo Show but Apple-style. It will have a square screen and an entirely new operating system. The idea is: what would a Siri AI operating system look like? This is that: intercom, video conferencing, proactive intelligence.
So you walk up to it, it recognizes who you are, and it will show content personal to you. It will know who is speaking. Obviously, the Amazon Echo can do that, but Apple’s doing it in its own Apple-y way with AI-based Face ID.
They’re working on a home security system. They’re working on another version of the smart home hub that I just talked about that is attached to a robotic arm. So you put it on your desk, and it can move around. It’s actually a category that’s pretty popping in Asia and in China right now.
Then you’ve got the wearables, the smart glasses. I still believe those are going to be introduced and shipped in 2027, so not too far from now. Trust me, you’ll be wearing them. Within 365 days, you will be wearing them and have video footage of you wearing them at the Steve Jobs Theater. And if that is not the case, either something went horribly wrong for you or something went horribly wrong for Apple.
You’ll also have the AirPods with cameras. That’s an interesting thing that we should talk about, but they’ll have the AirPods with cameras and then a few other wearables that I won’t get into.
So this is what I was talking about when I said there were eras at Apple and people’s relationship with the company really changed. The Steve Jobs era was defined by devices, and in particular, Steve Jobs himself getting up and doing a keynote and famously putting up pictures of all the existing smartphones and saying, “Well, these all suck. And here’s the reason they all suck, and here’s the iPhone and here’s why it’s better.”
That created one kind of relationship between Apple’s enormous community of fans, its leader, and the products. I think that was very successful. I think the Tim Cook era has been meaningfully different. I think it’s largely a story about scale. To some extent, it’s a story about values. To a huge extent, it’s a story about privacy.
Apple has marketed itself as the privacy company. It fought the FBI to keep the iPhone encrypted. There’s a lot there with Tim Cook’s version of the company, but it’s more corporate. Certainly, it’s just a vaster company. It’s safer. It’s not as rough around the edges as Jobs’ Apple, but it wasn’t as device-based.
I don’t think the Vision Pro has the same kind of mainstream cultural impact as even the hockey puck mouse that Jobs put out. There was a thing that he could do with products that Tim Cook Apple could not quite do with products. And that just feels really different to me.
I’m going to correct you on that because every time I put an article or a post out about the Vision Pro being on life support, I get what amounts to basically a notch or two below a death threat from dozens of people. So people are passionate about it.
Dozens? Dozens?
Well, honestly, I think what it is is that people have created businesses around spatial computing and apps, and they’re just pissed off that they’ve invested all this time and money in a category that’s probably going to die out.
And then you have consumers who spent four grand on this product, and they’re like, “I saved up for this thing, I’m living with this thing, and I’m pissed off to hear the realities.” But if you have another hour, we can talk about the Vision Pro.
No, the comparison there is good. People have invested in it. They care deeply about it. The comparison I’m making is that the relationship people have to Apple in the Cook era is as an institution. It’s just like this big thing that spans the globe on a massive scale.
It’s IBM.
Yeah, and in the Jobs era, it was all about really, really innovative new products that redefined categories over and over again. You’re describing a whole bunch of new products that came up in the Cook era that John Ternus is going to launch. How do you expect the culture of Apple to change around its products or its relationship to the culture to change as we go from one CEO to another?
But think about what they did. You’ve got the coolest new iPhone and Apple product in maybe 10, 20 years introduced one week after Tim Cook steps down. And then for the next 12 to 18 months, you’ve got, I don’t know, six or seven new product categories. Maybe you have 25 pretty breakthrough things.
So Tim Cook made a decision that, even though his tenure at a product company was pretty limited in major new things, the Apple Watch turned out to be a success, even though it started as a complete dud, as you remember. The AirPods are a unique beast in that they’re an accessory, but it’s not a platform on its own yet. It’s going to get there. And the Vision Pro is a failure.
Tim Cook could have ended his tenure as CEO with the iPhone Duo. He could have just waited. Typical transitions at Apple happen mid-October or mid-April; they happen on January 1st. It was a specific decision that was made for John Ternus to be the one to introduce the iPhone Duo. It was a specific decision made for John Ternus to be the one to introduce this whole new product roadmap. Even though, as you know, because of the length of hardware development cycles and R&D, these things were in the oven for five to 10 years.
So it’s really interesting that this decision was made to let Ternus be the face of this whole new era of products rather than allow Tim Cook to take the credit for it. And I think that’s to your point where they’re trying to draw the line in the sand of this new era. If Cook is already going to step down in the next three years, let’s just do it now and let Ternus take the credit for everything.
Take me inside that. You’ve obviously done a lot of reporting. I think you were the first to break the news that Cook would be searching for a successor. You were, I think, among the very first to break that it would be Ternus. Tell me about that process.
This is a big decision; Cook is going to play a huge role at the company. He has a massive compensation program tied pretty much to having to talk to Xi Jinping and Donald Trump. It seems like that’s his job: to just manage that relationship.
For $47 million a year, I would talk to Trump and Xi Jinping on the phone every day.
[Laughs] I would need at least 50, but that’s just me. That’s his job: to go do politics much the same way that Eric Schmidt at Google was in charge of governments after Larry Page became CEO. There’s a whole pattern here.
Brad Smith at Microsoft, even though he wasn’t CEO, but yeah.
He’s the president of the company. Yeah, there’s a parallel here. Tell me about this decision of Tim Cook wanting to elevate his position to something like that, and of making John Ternus the face of the product side of the company in this new role.
So 2023 rolls around and Tim Cook starts every executive team meeting, all high-level meetings with people at Apple at the executive levels, with, “We need to start taking succession seriously. We need to start thinking about who the next people are.” At that time, there was a really strong realization that many of the people at the top of Apple either had half a billion dollars in the bank or were already billionaires, and that this era would start to age out really quickly.
And so Tim Cook knew that he wanted to take a step back. Jeff Williams, the number two as the COO, knew he wanted to retire. The CFO, Luca Maestri, wanted to retire, too. The general counsel, Kate Adams, also wanted to retire. They were all about the same age, give or take a few years. So they basically came up with this plan that would go one by one over the next few years.
It started with the CFO. Luca retires at the very end of 2024, and he’s replaced by the new CFO, Kevan Parekh. Then 2025 rolls around, and Jeff Williams, the COO, retires and is replaced by his deputy, Sabih Khan. Then in 2026, they had the transition for the general counsel, and they got a great replacement for her from Meta, Jennifer Newstead. And then at the end of 2026, the big one: Tim Cook to John Ternus. So they played this out very, very slowly.
What Tim Cook has done, and I do think this is going to change in the Ternus era as we progress here, is that he came up with this strategy that I call “Hotel California.” You never want to leave. Tim Cook, he’s staying around as executive chairman. The general counsel had her stay around an extra six to nine months to run government affairs. Jeff Williams stayed around three to four months after stepping down as COO to just oversee the design team, the watch team, and the health teams as part of a transition.
For CFO Luca Maestri, the vast majority of his responsibilities went to his successor, but he kept three things. He kept oversight of information systems and technology. It’s basically like your IT department, corporate information security — which is security for the organization — and corporate real estate, so campuses, retail stores, facilities, and whatnot. It was kind of a BS job, I’ll be honest with you.
It was more so keeping him on the payroll and keeping him around in case things hit the fan, they had a financial issue, and they needed the adult or the grandfather in the room to take the bull by the horns and fix things as they transitioned to the new guy. But now Luca, he’s still there, still getting paid, and he’s teaching a class once a week at Apple University. So he’s a professor there now. I’m not sure how much longer that’s going to run for, but he’s still there.
All these old-school Apple guys are either retired or semi-retired or a notch between semi-retirement and retirement. And then we have Phil Schiller. The same week that Ternus took over as CEO, I reported that Schiller is leaving his remaining responsibilities of running the App Store and running Apple Events, and he’s at Apple now for the next little while working on special projects. They’re not saying what that is, but he’s there, reporting to Ternus, and still on the Apple leadership website. He’s around if needed in sort of an advisory capacity, and we’ll see how long that lasts.
But really this is just a gigantic end-to-end change of the guard at Apple. It’s the biggest executive overhaul I’ve certainly seen in my career reporting on Apple. Don’t forget, when Tim Cook took over for Steve Jobs, there was no overhaul. Many of the guys under Cook were the same guys under Jobs. So a lot of them have been there for a while.
This is definitely a new era, a new generation, and you’re going to see more changes. The head of marketing, the head of retail, some of the other people, they’re in their mid-60s, almost. They’ve got hundreds of millions of dollars. They can’t do this forever. They’re talking internally about retirement. So you’re going to see another wave of changes in the next few years as well, I believe.
You mentioned Phil Schiller, who I’ve known for ages at Apple because I’m old. He’s transitioning out of his role running the App Store. And you had a piece of reporting that suggests part of it is because John Ternus and Eddy Cue want to extract even more money from developers. They want to keep that Apple tax high. They want to find more ways to have services revenue, and Schiller wasn’t interested in that.
Schiller has famously always thought that Apple was squeezing its developers too much. There’s reporting; there are emails from some of these lawsuits. What’s going on there?
Yeah, it’s very interesting. I mean, obviously one part of it is that Schiller is 66. He wants to spend more time with his family, but for real, when it comes to him, he wants to do more philanthropy. He’s been involved in all sorts of stuff in that regard. But at the same time, this is a new era for Apple. Eddy Cue has a firm grip over all Apple services now, really for the first time in a while.
John Ternus is very close with Eddy Cue, and they are looking at new ways to make more money on the App Store, whether that’s additional advertising slots or additional subscription opportunities. Obviously, there’s going to be a reinvention of the App Store coming in the next few years to make more use of AI and to fill in to Siri AI as well.
Phil Schiller, according to my reporting, believes regulators are still hot on Apple’s trail. Developers are still unhappy with Apple. As they go into this new generation, he wants to distance a little bit from it, but he still loves Apple more than anything, and he’s still part of Apple for the foreseeable future.
To be clear, there was no big blow-up or anything between him, Eddy Cue, and Ternus or anything like that. It just, with all these considerations, felt like a natural time for him to step off. And he’s also stepping away from Apple events, right?
So it’s not just dropping the App Store; it’s dropping his two remaining responsibilities, which was a lot, right? He was part of the Hotel California crew, but he had the most responsibility between the App Store and Apple Events. Those are big things.
Yeah, and worth noting, he’s not wrong about the regulators. There’s still an outstanding Department of Justice antitrust case against Apple regarding the App Store, CarPlay, and all this other stuff that was started under the Biden administration and has not gone away in the Trump administration.
First of all, it’s surprising that it hasn’t gone away under the Trump administration, given the alliance between Donald Trump and Tim Cook. That has always been shocking to me. I thought that was going to get blown up a year ago.
And then the other thing is nobody knows any of this more than Schiller because he’s the one at the center of every meeting. He’s the one doing the depositions. He’s the one on the stand. So if anyone has the pulse of these governments and the pulse of developers, it’s him.
The big Decoder trope is that the structure of a company is connected directly to its culture. If you tell me how your company is roughly organized, I can tell you where about 80 percent of your problems are and where the other 20 percent of the magic is.
Every now and again, I get pushback on this from a CEO who says, “No, no, it doesn’t matter. It’s all about the people.” I feel like Apple is both, right? The structure of Apple has been the same for a long time. Steve Jobs used to call it the world’s biggest startup. And then you just had these people who had been there forever. They’re just the same cast of characters under Cook as they were under Jobs.
You could probably shuffle them any way you wanted, but it was the same people, and so, of course, the culture persisted. You’re describing a wholesale turnover at the top. And then it also seems like there are some structural changes happening underneath John Ternus, right? Jony Ive was the chief design officer of the company, which always felt to me like part of that Hotel California strategy.
Oh, that was its own… That was like Hotel Cupertino. I mean, that was its own level.
But they were afraid of him leaving because he was so tied to the Jobs era, and then they managed to work him out of the company. We can talk about OpenAI in a bit. But Johny Srouji is the chief hardware officer now. That’s not a title Apple has ever had before. That also feels like potentially a transitional title.
Can we talk about that? Can we talk about Srouji for a minute?
Yeah.
Right now, Srouji is the second most important person at Apple. He created Apple Silicon. And let’s just face it: you cover the whole industry, I cover the whole industry; that’s their key differentiator. That’s what allows them to do different stuff. That’s their competitive advantage. Letting this guy walk out the door would’ve been a nightmare scenario, especially right now.
Last fall, really late summer to early fall, he goes to Tim Cook and tells him he’s done. This is right when planning for Ternus taking over is kicking into high gear. Tim says, “I need you to stick around as part of the transition. We can’t have you go elsewhere. We can’t have you go to Nvidia,” or wherever he was thinking about going. Certainly not retiring. This guy’s not ready to retire, I don’t think.
So Tim says, “Here’s what we’ll do. When Ternus becomes CEO, we’ll make you chief hardware officer. So you’re going to keep your existing team, and then you’re going to get all the Ternus stuff, and then you’ll undoubtedly be the second most important person at Apple.” Srouji agrees, takes a new pay package, I’m sure, and now is in that chief hardware officer role.
I do not believe that is a long-term thing. I think that he’s already back to wanting to transition to something new, to transition out of Apple. He really has not a lot left to do. He conquered the Mac; he dumped Intel; he dumped Qualcomm. What’s left? This is a guy who wants new challenges and new things, and he’s done it all at Apple, and there’s no next thing to go after. They’ve really done it all.
So it’ll be interesting to see how quickly that happens, I think in a year or two. And then when that happens, this recombination of the hardware engineering teams into one group, they’re going to have to break that up again because there’s no successor to Srouji who has that industry clout and that leadership capability to be a singular hardware figurehead at the company.
Yeah, if you have managed to acquire Intel’s disastrous modem business and fix it, what worlds left are there to conquer?
Exactly.
It was the hardest thing you could have possibly wanted to do, and he did it. Those modems are shipping in the new phones.
And no complaints, right? If I were to place a bet with you two years ago, how is this Apple modem thing going to go? I would’ve guessed it was going to be a disaster.
Well, they did have to slow down the Qualcomm modems to make their modems look competitive.
Fine, but-
There is certain stuff in there for sure.
Fine. But I’m talking about articles, about people’s calls dropping, not being able to load webpages and whatnot. All things considered, pretty seamless.
True. So this is the question that I’m really getting at: we’re talking about a lot of new people and, inside of it, a return to form in terms of just what that leadership page looks like. There’s no chief design officer who’s a legend in his own right. You’re saying soon there won’t be a chief hardware officer who’s a legend in his own right.
Of the heads of design listed on that page, Alan Dye left and went to Meta. Now they’re just vice presidents again. They’re not even SVPs of design, but they report to John Ternus. We’re headed back towards a more functional Apple. They’ve gotten to some kind of divisional structure as they try to keep all these powerful people. What do you think that’s going to do to the company, or is that just going to be more of the same?
It’s so interesting. You look at the number of things and the amount of stuff that each of these reports that John Ternus has; it’s a lot. I also think you have a problem where there are vice presidents, so a tier below the SVPs, who want to grow, but you have these senior VPs who are going to be there forever, like Eddy Cue.
He’s been there for almost four decades. And you’ve had people under Eddy Cue who’ve left for newer jobs and big things outside of the company because they wanted to replace Eddy internally, but they know that he’s never leaving. They knew that he was going to stick around for a long time. So you’re losing good people at the VP level.
I think, eventually, you’re going to see an additional layer. I think you’re going to see this chief hardware officer idea become some new thing they’re going to try. For example, could they make Craig Federighi, who runs software, like chief software and AI officer or something at one point, and then elevate some of the people under him to that senior VP level, give them more responsibility, give them more money to keep more people around?
So I think that leadership structure is going to be in flux for a while until they figure out how to do this. I mean, the old, old Apple, they had VPs, they had senior VPs, they had executive VPs. You can imagine they’re going to play with these things in order to keep people, because I think one of their biggest problems, other than AI at this point, is retention of key players.
I actually would draw the connection between retention and AI. Not having that bench of younger people with new ideas or disruptive ideas, I think, prevented them from seeing AI for what it was.
That’s a really good point.
I think about what came to be known as the Cook Doctrine, where Tim Cook would often say, “We want to own and control every foundational technology that goes into our phones.” This is really just a statement of Apple’s own paranoia about being chained to Intel for a long time or whatever it might be. They couldn’t see a way to own and control AI because it’s just a massive investment. They had just blown a bunch of money trying to make a car, and they kind of missed it.
They don’t have a model of their own that competes at the frontier. And so Apple distilled Google’s model, and this feels like a pretty big jump away from the Cook doctrine. Do you think they’re going to have to compete in AI by making their own investments on the frontier, or do you think they’re happy where they are?
It’s one of the craziest things that I’ve ever heard — Craig and these other executives in these interviews over the last year saying that, “We never owned search. We don’t need to own AI.” First of all, two completely different things. Second of all, to your point, they have spent so many tens of billions, hundreds of billions, talking their mouths off about owning something as simple as a cellular modem. When I say simple, I mean something as commoditized as a cellular modem, spending billions to buy and then try to fix the Intel modem business.
So you’re willing to do that, to own something like a modem, but you’re not willing to own AI. It’s ridiculous. And they know that; that’s why they tried to own their AI and build it from the ground up. They ran into a wall, and they had no choice but to partner with Google on fixing up their models.
The idea internally has always been “we are going to work with Google as a stopgap solution until we’re able to do our own models from the ground up.” Let’s put that aside. At the same time, I’ve seen absolutely zero evidence that they’re actually working on that plan A again. I’ve seen no evidence that they’re hard at work on building fresh Apple-made models from the ground up.
I’ve seen no evidence that they’re running around to make big AI acquisitions. I’ve seen no evidence that they want to start throwing huge pay packages at AI researchers for Meta, Google, Anthropic, or OpenAI. So right now it feels like we are at a standstill. It feels like they want to see how this Google deal and how working with third parties goes for the next several months, and then they’ll make a decision if they want to go back to sort of building and competing with the other guys.
I think they want to see how things play out. I think they want to see the Anthropic and OpenAI IPOs. I think now, with all the news about AI safety, they want to see how this all plays out, and maybe they’ll make a decision in six months about where they want to go. But as of right now, I’ve seen no evidence that the transition of moving back to in-house stuff is happening.
To be fair, it’s an advantage that there’s no chance that Siri will kill us all. It simply is not capable enough to do it.
Again, Nilay, they fell backwards into that. It was not a strategy. Apple’s current AI product was not the result of good work, right? It was the ultimate failing upwards.
Let me ask you about that, because right next to that, I mentioned Jony Ive; he’s obviously working with Sam Altman. They’re going to build some set of products at OpenAI. A lot of Apple designers have gone over to OpenAI.
There’s a very contentious lawsuit between the two companies. Apple accuses OpenAI of stealing internal information and product plans. OpenAI says, “This is just the normal course of business. We’re just having conversations and job interviews.” We’ll see how that plays out.
The threat is that Ive will design the next class of products using natural language input as the next-generation user interface, the same way that the multi-touch screen was the next-generation user interface on the iPhone, and that will disrupt all the old paradigms.
I know that’s what he’s thinking because when he made his very romantic launch video with Sam Altman, he described the phone and the laptop as legacy devices. I thought that was a very powerful thing for him to say, given that he designed the paradigmatic examples of those things.
And Apple makes the best legacy devices, and they don’t want that to be their final chapter. They want to make the best new-generation AI devices. And here we are, them still trying to continue to make the best legacy devices, but they really need both.
Well, I see it two ways. One, Apple has to get ahead of the curve somehow. If they don’t have the frontier AI model that can literally listen to anything you say and do anything you want, then what are they going to make this device out of?
And then on the other side, you have OpenAI, and if its device doesn’t have an Instagram app, everyone will still carry their iPhone with them. Then they will just use their iPhone because it has a big screen and potentially unfolds into an even bigger screen. So they’re kind of pointed at each other, each missing the thing the other one has. How do you think that gets resolved?
Okay. I think Apple is terrified of whatever OpenAI is building, and we can talk about that. It’s a hockey puck-sized AI computer type of device that you talk to without a display or whatnot. I think Apple’s terrified. In fact, the latest development in their lawsuit is that Apple wants the court to show them and give them access to the upcoming device so they can analyze if it has any of their materials in it. So good luck to them on that one.
At the same time, I do think Apple has the ability to fast-follow anything OpenAI does. If OpenAI puts out some remarkable product and it begins to hit steam, Apple’s just going to copy this thing and follow pretty fast. Unlike the smart glasses, where they’re coming five years, seven years after everyone else, I think if this donut or hockey puck thing is successful, Apple will follow them immediately.
I think the models are getting commoditized to a point where they could fast-follow and have a very effective product. If Apple goes to Anthropic and says, “We want to copy this OpenAI device,” and obviously they’re not going to give us their secret sauce and models, “will you partner with us on this?” Yes. If they come to Google, “We need even better models. Could you partner on this?” Yes. Google has no legitimate hardware business that’s going to be destroyed over partnering with Apple on hardware. Anthropic has no hardware business. Apple can get this done.
So yes, they’re afraid, on one hand. On the other hand, I really don’t think they need to be that worried because if it’s a success, they can just copy it, which is, I guess, what they’re accusing OpenAI of doing from the beginning anyway.
In terms of the lawsuit, it is very clear that OpenAI employees have done some shady things. I’m surprised that the iPhone engineer, or former iPhone engineer, is at the center of the lawsuit; this is the one they’ve accused of taking material with him and sharing it with people and whatnot. I’m shocked that OpenAI has not cut bait on him and moved forward. I think their fear is that if they cut bait on this guy, employees are going to revolt.
How could we trust working at a company like this if you are going to get sued by Apple, even a company that big, and you’re just going to cut bait on someone, right? So we’ll see what happens. We’ll see what happens. They’ve done shady things, but a lot of the stuff, as you said, is common business practice, stuff that Apple probably even does too.
It’s very notable to me that none of the filings in the case so far have any mention of Jony Ive. Neither company wants to point out that Steve Jobs’ number two is at the center of all this because he’s leading the design of this product.
I think it’s by design. I think it’s notable. And I even think the origin story of this lawsuit is Jony Ive himself. I think Apple’s point of view is that Jony Ive was on Apple’s payroll for half a decade or more after the Apple Watch. During that time, basically destroyed the Apple design team from within and took everyone with him to build a competitor to the products that he developed at Apple. That is Apple’s viewpoint.
I think there’s a lot of anger towards Ive at the very center of this, particularly from Tim Cook and some of those other players there. I think Jony Ive’s perspective is that all the Apple products today are direct siblings of everything Jony Ive developed there. Even the iPhone Duo, you can see Jony Ive’s work in there. It’s all part and parcel with Jony Ive.
I think that he believes that he created the product portfolio that’s the basis of this $3 to 4 trillion company. And he was tired after carrying that company post-Steve Jobs and very sad about Steve Jobs’ death, and wanted to move on. He and Tim Cook came to an agreement that he only needed to work at Apple for a few days a week. And so what? If he wants to eventually leave Apple and build something new and have people follow him, that’s up to them.
So I think it’s two very different sides of the same story, and you can side with whoever you want to side with. But I think it’s really unfortunate that things did not work out for Apple and for Jony Ive together in this instance. I think he saw AI as the new core technology that he can develop something really cool around, just like the iPhone was developed around the cool technologies back then of the App Store, Multi-Touch, and what have you.
What’s really interesting about that, and this is a whole different podcast, is that all of Ive’s best products are designed around limitations. The iMac was designed around the limitation of the CRT display. AI doesn’t have any limitations because it always just tells you it can do everything. I’m just dying to know what he identifies as the limitation that makes the magic of the next Ive product. As I said, that’s a whole different podcast, but it’s just on my mind as I think about what he might do to make this more than just a hockey puck that’s listening all the time.
I’m psyched to play with it and to see it. And I think this screenless idea is both a blessing and a curse. I think that we’re going to really see how effective AI is when we’re using it without a screen and having it in the background.
But at the same time, there are things about displays that are not replaceable with screenless devices. Gaming, massive market. Video conferencing, massive use case. Watching video, another massive market use case. I just don’t know how OpenAI takes over the world with a device that can’t video chat, can’t do gaming, and can’t do video. And we’ve seen historically that being an iPhone companion, that just doesn’t cut it.
Actually, this brings me to you mentioning the AirPods with a camera. AirPods are a success because they have a huge attach rate to iPhones. People buy iPhones; they buy AirPods. People buy iPhones; they buy a set of AirPods. There you go. You got a huge business.
And then you lose them every six months, or you break them, and you have to buy new ones. So it’s crazy.
You mentioned that adding a camera to AirPods might turn them into a platform unto themselves. That would obviously compete with some of these screenless devices or these AI native devices. How would that work?
Okay. These AirPods basically have the visual intelligence feature that you have on your iPhone. You could point at something. You can take action on it. You can get more information. It’s built into the AirPods. It’s no different. So one use case is that I’m on my computer, and I have my phone, and I want to add something to my calendar. I just point my iPhone camera at my email, and I say, “Add this to my calendar,” and it adds it to my calendar and parses all the links. The AirPods could do that for you now.
You can tell your AirPods, “When I get to the pasta aisle at Whole Foods, stop me, ping me when you see the tomato sauce I’m looking for,” and it’ll do that. When you’re walking around a city, and you ask it to get directions to the nearest Walgreens, instead of telling you, “Turn right in 40 feet,” it’ll say, “Turn right by the black sedan parked at the corner.” So it uses visual information to provide you with context to help you throughout your day.
It’s a game changer, I think, and I think it’s going to be a really sought-after product. And I think that the changes we saw with the AirPods 5 at this Apple event, where you’re now getting really solid ANC, even though it’s not inner ear, with some Pro features like the volume swipe at about 150 bucks, that’s a really good product at a really good price. I think that’s setting the stage for needing to make the AirPods Pro that much better. And that’s where the cameras come in as that core differentiator.
This brings me to the last thing I want to talk to you about, which is Apple and privacy. The things you’re describing with AirPods are science fiction ideas that have been around forever. I tried Microsoft HoloLens 10 years ago, and they were doing augmented reality demos that are very much the things you’re describing. They had me change spark plugs in an ATV. I’ll never forget doing this with their big silly glasses on my face.
The problem has been one: it’s very hard to shrink that technology and have the appropriate battery life. And then the other problem is, well, you’ve got a camera pointed at everything around you all the time, and people don’t like that.
I’m always joking that I think the killer app for Meta’s glasses is facial recognition. If you just gave me a pair of glasses that would tell me everyone’s names and faces at events, I would be the single greatest politician in world history.
The problem with that is that it requires a worldwide surveillance database of everyone taking each other’s pictures all day long. And that is probably not an appropriate trade-off for me to be the greatest politician in the world. But I’m just letting you know, I think that product would be cool for my personal benefit. The social cost would be too high.
This is Apple’s brand — privacy — and they’re up against people calling the Meta glasses pervert glasses. They’re in a world where people hate Flock cameras and all the surveillance that’s happening online. They’re doing watchOS 27 with an always-on listening feature that just does transcripts. It doesn’t record or store any audio, but–
Still a surveillance device. I’ll be honest with you. I can’t believe they did it.
I can’t believe they did it.
I can’t believe they did it.
Right? It’s just listening, and you can double-click it, and it’ll show you a transcript of the last 15 seconds of what someone said to you without their permission.
First of all, read the room.
It doesn’t even light up.
No, I know. No, that’s not true. It does light up. But read the room.
I was told it doesn’t light up.
Okay. First of all, we can get into this, but I was not at the Apple event for obvious reasons. I haven’t been at one since 2019.
Well, you already know what’s going to happen.
Well, I didn’t have the briefings.
Yeah.
But according to the literature on their website, when you’re doing that feature, it lights up with a microphone icon when you do the live rewind. Maybe it doesn’t light up for the Siri Recap — I don’t think it does for the all day listening — but the last 15 seconds things, it supposedly shows a microphone. But Nilay, is this podcast a video?
Yeah.
Okay. I’m wearing an Apple Watch. Can you see anything on my screen?
Right, it’s crazy to me.
So I can’t believe they did that because, really, you’re going to take a backlash like this and then do it again with a visual intelligence six, nine months from now?
And then you’re going to do it with a pair of smart glasses, and you’re going to walk into all of the other things.
Yeah.
It feels like Apple knows that there’s a next generation of user interfaces coming that is AI-powered that requires an amount of ambient capture, whether that’s just listening so you can talk to it or whether it’s visual so you can see the world around you. And they haven’t solved the social privacy aspect.
Nope.
There are white papers about how Apple might have solved the technical database privacy aspect, right?
Yep.
They’ve got Private Cloud Compute, and they’re going to encrypt the data. They’re not going to store this and that. And I don’t think any of that’s going to overcome the social privacy aspect.
They didn’t do a good job on articulating the social aspect of it at all. They could’ve shown more demos. They could’ve discussed it a bit deeper. I know they only have very limited time in the keynote, but I don’t think they spent enough time breaking things down here. I quite frankly think they did not do a good job rolling this feature out.
I ask myself, would I be comfortable using this feature? Yeah. But then if I tell everyone around me in the last week, “Hey, I’ve been recording you the whole time,” they’re going to freak out, and they’re not going to trust Apple. So it’s a really interesting one. I’m pretty shocked they did it.
What are the net new Apple Watch buyers because of this feature? What is the bigger challenge, doing this feature or not doing this feature? And I think that doing this feature is a bigger drawback than not doing the feature. Here, there is no cost of not doing something.
Well, there is a cost if you think there’s about to be a wave of AI devices that are doing always-on transcripts and meeting recordings, and OpenAI is going to do something. I mean, we have seen a wave of startups that do this.
But we’re not there yet, right?
Right.
This could’ve waited six months.
So you can just foreclose it. This is like Microsoft stuff. You’re like, “Here’s a preview of a feature. Don’t even consider that stuff. Eventually this will get good,” and you’ve just foreclosed the competitor.
Well, the other thing is they had nothing else for the watch, so they had to just do something, right? This is the weakest Apple Watch update we’ve seen in a long time, and they’re lost as to what to do next. Now they’re recalibrating it. They’re going to have a major watch revamp at the end of next year and so forth, but they have to do something.
If it were me, I would have ripped off the bandaid at the same time with all the audio plus visual intelligence stuff next year. Do it all together and have a really coherent privacy story.
But do you think that stuff is compatible with Apple’s reputation for privacy? This is the real question I’m getting at: they might not have told the right story about the Apple Watch.
Apple is going to have to tell the right story about AirPods with cameras in them in a world where people are shooting spray foam at Flock cameras because they don’t want them in their communities. There’s a connection between these two ideas, and it doesn’t seem like Apple knows how to tell that story.
Well, clearly not, because they haven’t done it. But here’s the story on the AirPods. They can’t record actual video. They can’t take actual pictures. They have an extremely low frame rate. I’m talking about a few frames per second.
The actual data that gets input into them, it’s like… Have you ever used a Roomba, and when you look at the app, what does the Roomba see? It’s like wireframes of the environment. It would not be able to tell you and me apart. It’s just seeing two people.
Then how can it do the brands of tomato sauce in the aisle?
Well, in terms of non-people, it’d be able to do that, and it could read text. So it’d be pretty heavily reliant on reading text and seeing color and whatnot. But being able to differentiate between two people would be very difficult. It’s almost like a fake reproduction of what’s around you. I don’t have a good explanation for it, but I’m sure if they wanted to, they’ll give a good one.
I’m not sure they’re going to break it down. They might just say, “Just trust us. We’re Apple. It’s not taking pictures. It’s not taking video. It doesn’t know what it’s seeing to some extent.” So we’ll see how they play it. But I would’ve done all this stuff together, ripped off the bandaid and spent a lot of time focused on it. There was no need to do this audio intelligence feature at the end of ’26 when you could have done it at the end of ’27.
Unless you’re trying to slowly boil the frog, right? You’re going to get people mad about this, and then you’re going to do the next one the next time.
Right.
It just seems like this next generation of devices involves some kind of ambient listening that we are not ready for as a society. People are really mad about Meta glasses. What are you going to do about it?
They soiled the water for Apple and a lot of other companies. Meta being the first mover on this created an industry-wide problem. And I think even though Apple has such a strong privacy stance, there are people who don’t believe them. There are people who don’t care what they have to say. There are people who are going to be angry about the Apple glasses and whatnot.
I think Apple, to some extent, is on such a high horse with its privacy message that it came away surprised that there would be some backlash to Apple doing this. They think, I believe, that people are overblowing it when it comes to Apple and everyone should just be focused on Meta. And just because Meta has done a poor job protecting people’s privacy doesn’t mean we’re going to. So we’ll see what happens.
One thing: when I talk to the folks there, they never make the connection between Apple and Meta in the sense that Meta’s apps run on Apple’s phones. People are mad about Meta, and they still think the phones, Apple’s phones, are listening to them, and they can’t quite make that connection because it undoes a lot of their own messaging. If you believe your iPhone is listening to you, that’s not just Meta’s problem. It is also Apple’s problem.
They kind of have to actively ignore that relationship because otherwise everything else falls apart. And I think that’s why there’s this blind spot. If people’s watches start generating transcripts, it’s exactly the same relationship as “my iPhone is listening to me, and that’s why I saw an ad for a vacation that I only talked to my friend about.”
I’m curious what they’re going to do. I have a feeling they’re just going to bulldoze their way through it. They’re going to just try to tell a good story. They’re going to do a ton of PR briefings about it. They’re going to do a ton of white papers about it, and get as nerdy and in-depth as they can on this stuff.
You know what they’re going to do? They’re going to throw out a lot of comparisons. I even heard Ternus do this in one of the interviews, in Apple’s statement on some of these features. I could totally imagine them saying, “Why is it any different recording from smart glasses if you could just hold your phone up and record people?” With the audio intelligence feature, one thing I didn’t even think of is the Apple Watch-
It’s very funny you just mentioned that because that is exactly what Mark Zuckerberg just said to our friend Alex Heath.
Oh, that’s funny.
“How is it different from a phone?” This is the industry’s approach. I think the answer is that people are like, “Yeah, I can see you doing that, and I feel very comfortable telling you to stop.” There’s something different about that.
I didn’t even realize this. Someone pointed this out to me the other day. It’s like your Apple Watch has had the Voice Memos app for, I don’t know, eight years at this point. Who stopped anyone from recording their whole day with the Voice Memos app on the Apple Watch anyway? This is just a more privacy-centric version of that. So Apple’s solving a problem here. They’re not creating one. So it just depends on how you look at these things. I think they’ll bulldoze their way through it. It’s going to be a problem, but I think they’ll be fine.
All right. Last two before I let you get out of here. We’ve talked around the iPhone Duo a lot. We’ve mentioned it a lot. It’s the thing that just came out. We haven’t talked about it. What do you think of it?
I think it’s incredible. I think, and this is a bold take, that foldables will become the new normal within a decade. If you look at the market share of smartphones at the end of 2006, smartphones had like 6 percent of the market. Now they have 85 percent of the market. It went over 50 percent of the market after five to six years.
The iPhone itself was not the source of that, but the iPhone got everyone into the smartphone game. I think the iPhone Duo is going to do the same for the phone market. I think it’s going to become the new normal.
Even though Apple is a late mover to foldables?
Yeah. I think the Apple brand is that strong, really. I really do. I think the fit and finish, the software integration, is going to get people really excited about this category. I think that the Apple Upgrade program, the leasing program, will eventually expand internationally. I think that’s going to get people in it.
I think that at some point they’re going to stop advertising sticker prices and focus on the monthly prices, and they’re going to get people locked into this thing. They’re going to have a family of iPhone Duos over time. You’ll see every phone maker just transitioning, transitioning to foldables. Samsung: half the line is already foldables. Very soon the candy bar style is going to become legacy.
That’s a big prediction. Although I will say their iPhone handoff feature, where you can move a number between phones, seems to point to a future where I, for example, have the folding phone for work and then a much smaller, lighter phone for the weekends with the family. You can see that vision taking shape only because it’s now easy to port a number between devices, just whenever you want, which I think is incredible.
Last question. We’ve talked a lot about Apple, its culture, and its set of products. What do you think its biggest challenges are in the new era under John Ternus, and what do you think its biggest opportunities are?
I would say that I think the biggest challenge and the biggest opportunity are the same thing. Ternus’ Apple for the next three to five years is still Tim Cook’s Apple, right? That’s just the reality. He’s still going to be there in the background. He’s still going to loom large, and the product pipeline is still going to be coming out of an era that started under Tim Cook.
But in five years from now, they are going to need to start thinking of what actually replaces the iPhone as the next thing. We went from the Mac to iCloud to AI as the center. What is Apple’s new thing after the phone? What is Apple’s new thing after the current generation of AI? And Ternus’ tenure as CEO, I think, will go down as a success if he’s able to find that next new centerpiece. He’s got a few years before he needs to start cooking on that, but I’m talking about something that can be in development for 5 to 10 years.
Tim Cook never had the opportunity to have his new centerpiece of the company. He never had the opportunity to put his stamp on products at the company for two reasons. Both things that he tried to do as his centerpiece failed spectacularly. Obviously the Vision Pro, but the car — the car, that was Apple’s multi-trillion-dollar market cap opportunity, and they just blew it. Ternus will need to successfully hit that.
I’d actually put a third thing on that list. It was the very beginning of the Cook era, with Jobs literally on his deathbed, and he said he’d figured out TV.
Oh, yes.
He had to spend however long pretending he knew what that meant because I don’t think it had been solved. And so there was this first wave of “Apple’s going to redefine TV” because the last page of the Isaacson biography had a Jobs quote on it.
They haven’t even done a new Apple TV box in four years.
That’s a long time. It’s funny because you don’t need one. It never occurs to me that I need to upgrade this thing, but maybe there’s going to be some AI feature.
Well, Siri AI. They’ve been waiting for the Siri AI update. This could be a whole other podcast, but Siri AI has been the gate to all of these new product categories. The AirPods were supposed to be out already, the Apple TV, the HomePod, the smart home hub… all these devices were supposed to come out. Apple couldn’t do any of them until Siri AI. Now Siri AI is here, so the floodgates are open.
All right. Well, Mark, we’re going to have to have you back on the show to talk about those floodgates and all these new products very soon. I can’t believe you haven’t been on until now. Thank you so much for being on Decoder.
Yeah. And obviously I’d love to have you on my new podcast, Power On Podcast, launching very shortly. So thanks in advance.
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