Stop me if you’ve heard this one before: Tech company’s new CEO thinks the company can do more with fewer people! That’s the gist of a new report from Mark Gurman at Bloomberg about the internal changes Apple is now going through after its first few weeks under new CEO John Ternus.
For investors, it all sounds like good news. For employees, it’s worrying. And for customers and Apple users, it’s a bit of a mixed bag.
The good news is that there’s a real effort to release more products. We’ve expected for some time that the first year of Ternus’ time as CEO would be packed with new products, not necessarily because of the new CEO, but just because a lot of products long rumored to be coming are finally nearing completion.
The folding iPhone Duo was just the start: There are touchscreen MacBooks, AirPods with cameras, smart glasses, a new smart home hub, and a 20th Anniversary iPhone all coming up in the next 12 months. And that’s in addition to regular updates to iPhone, iPad, and Mac product lines. However, that’s not enough for Ternus, according to Gurman’s wide-ranging report.
According to his sources, Apple’s new CEO wants the company to become “more experimental” and introduce new products more quickly. There’s definitely a double-edged sword to that philosophy: Most Apple fans want the company to take risks and big swings like iPhone Duo, but nobody wants to buy an Apple product that gets abandoned after a couple of years because it didn’t take off. Apple has always prided itself on its selectivity, so a focus on risk-taking is, in itself, risky.
Ternus also believes, according to the report, that Apple products should be released year-round, not just at a big event in the fall and the spring. That’s definitely a stance we can get behind.
The report says Ternus believes Apple can accomplish this accelerated, engineering-focused, bolder product roadmap while still becoming “leaner.” He believes Apple should hire fewer people and trim its bloated middle management. In the last couple of weeks, Gurman reports, Apple has begun dismissing engineering program managers (EPM), and multiple teams have been scaled back or reassigned as the company has carried out some small-scale layoffs.
Groups that have been reduced recently include the Siri team, Vision Pro headset, some AI-related software engineering, and Fitness+. Some of these are allegedly due to employee performance, while others are due to changes in direction for those products.
Worryingly, Ternus is said to have “explored how artificial intelligence could accelerate product development and perform work currently handled by employees,” which is in line with other big tech companies that have pushed to get more done with fewer people through the use of AI. So far, it hasn’t played out well, with many discovering that AI’s shortcomings have resulted in as much additional work as they save, and a lot of companies have had to re-hire many of those they have let go.
Apple had a plan to lay off some 5,000 AppleCare support personnel, many of whom work from home, thinking it could use AI phone and web support agents to handle a lot of support responsibilities. But the company “ultimately put those plans on hold and isn’t currently looking to take such a step,” Gurman reports.
However, Apple is looking to cut costs in other places. Previously planned budget or staffing increases, the article claims, have been held flat or reduced.
The most worrying part is the claim that the new CEO is looking for ways to not just sell more devices to more customers, but to increase revenue from existing customers. Services revenue, while still growing, has slowed lately, and the revenue generated by the App Store is in peril as Apple’s policies are under scrutiny worldwide. That means Apple may launch new services, increase prices for existing services, or find other ways to generate revenue from its products, such as adding ads to Apple Maps.
A new CEO always comes with a period of major change and adjustment for employees. As a customer, it’s hard not to be concerned about a company that plans to do more, faster, with fewer people. That’s usually a recipe for lower quality. But it’s also quite possible that Apple is bloated with middle management that doesn’t do much other than slow things down, and a leaner Apple could be beneficial to progress.
As the article cautions, many of Apple’s long-established product development practices could take years to change. But in the meantime, as one source told Gurman, it’s going to be “hectic” in Cupertino.
