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Apple's Recent Leadership Changes Suggest Transition From iPhone Reliance to Focus on Services
A new report out today by The Wall Street Journal takes a look at the recent shake ups to Apple leadership, and how the changes could be an indicator that the company is transitioning from relying on iPhone sales to prioritizing its services business and other divisions.
Newly appointed executive John Giannandrea also heads Siri development
Specifically, the report claims that recent hires, departures, promotions, and restructurings have led to several projects being put on hold while the new managers reassess priorities. This has left many existing Apple employees "rattled" as they have become unaccustomed to such frequent changes in leadership prior to the shake up at the company.
Along with the staffing updates, Apple has trimmed around 200 employees from its autonomous vehicle project, and continues to redirect much of its engineering resources into its streaming TV service ahead of the planned 2019 launch.
iPhone sales dipped over the 2018 holiday season, leading to many reports about Apple's new plans to combat stagnating smartphone sales. The company is said to have cut back on new hires, and in January Apple lowered its revenue guidance for the first quarter of the 2019 fiscal year by up to $9 billion due to fewer iPhone upgrades than it anticipated.
At the same time, Apple's services business hit an all-time high in Q1 2019, up 19 percent year-on-year. During the first fiscal quarter of 2019, Apple's services business brought in $10.9 billion in revenue, including platforms like iTunes, the App Store, the Mac App Store, Apple Music, Apple Pay, and AppleCare. Thanks to their success in the wake of flagging iPhone sales, these services are expected to be a growing focus for the company over the next few years.
Specifically, the report claims that recent hires, departures, promotions, and restructurings have led to several projects being put on hold while the new managers reassess priorities. This has left many existing Apple employees "rattled" as they have become unaccustomed to such frequent changes in leadership prior to the shake up at the company.
The primary reasons for the shifts vary by division. But collectively, they reflect Apple’s efforts to transition from an iPhone-driven company into one where growth flows from services and potentially transformative technologies.These changes include the promotion of John Giannandrea to senior vice president, from a machine learning and AI role. After his promotion, Giannandrea decided to move Bill Stasior, head of Siri, to a lower role at the company. In terms of high-profile departures, retail chief Angela Ahrendts recently left Apple after spending five years with the company. These three major changes happened within the past two-and-a-half months.
Along with the staffing updates, Apple has trimmed around 200 employees from its autonomous vehicle project, and continues to redirect much of its engineering resources into its streaming TV service ahead of the planned 2019 launch.
“This is a sign the company is trying to get the formula right for the next decade,” said Gene Munster, a longtime Apple analyst and managing partner at venture-capital firm Loup Ventures. “Technology is evolving, and they need to continue to tweak their structure to be sure they’re on the right curve.”Now, Apple is focusing on building its services catalog and enhancing artificial intelligence features, which should in turn encourage more hardware sales. Replacing Stasior as the head of Siri, Giannandrea is said to be "looking to improve Siri's accuracy and performance."
iPhone sales dipped over the 2018 holiday season, leading to many reports about Apple's new plans to combat stagnating smartphone sales. The company is said to have cut back on new hires, and in January Apple lowered its revenue guidance for the first quarter of the 2019 fiscal year by up to $9 billion due to fewer iPhone upgrades than it anticipated.
At the same time, Apple's services business hit an all-time high in Q1 2019, up 19 percent year-on-year. During the first fiscal quarter of 2019, Apple's services business brought in $10.9 billion in revenue, including platforms like iTunes, the App Store, the Mac App Store, Apple Music, Apple Pay, and AppleCare. Thanks to their success in the wake of flagging iPhone sales, these services are expected to be a growing focus for the company over the next few years.
Tags: Angela Ahrendts, John Giannandrea
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8 months ago
I know a lot of commenters here will bemoan this but Apple will not survive if they do not increase their services. They will still be heavily involved in hardware but services are the growing future of the tech industry.
Apple has never demonstrated much competency in delivering services, so if Apple does not survive, it will because they shifted their focus to something they suck at.
8 months ago
Could they focus on pricing Macs and iPhones at levels that don't push even die-hard Apple zealots like me to near breaking point.
8 months ago
The iPhone bubble was going to burst eventually; phones have reached the point that year over year improvements aren’t enough for people to upgrade. Consumers’ current phones are just good enough.
With the news of shifting away from relying on iPhone sales and the rumors of a redesigned MacBook Pro in the works and the Mac Pro coming, I hope they get back to their roots and become way more well rounded with their products like they used to be.
With the news of shifting away from relying on iPhone sales and the rumors of a redesigned MacBook Pro in the works and the Mac Pro coming, I hope they get back to their roots and become way more well rounded with their products like they used to be.
8 months ago
What they don't realize is the service industry doesn't work if they force people to buy their hardware. It needs to be cross-platform to work like Amazon, Google, Netflix, Spotify, etc. so pretty much all non-Apple services.
8 months ago
Every investor already knows this and has known this for some time.
And what about humble readers who don't have shares in Apple? Are we not allowed to learn of this? :P
8 months ago
...because they shifted their focus to something they suck at.
The problem today is that Apple sucks at pretty much everything.
There is no single product without any issues. All they do is denying everything.
8 months ago
Sears was born as a mail order company. One morning someone at Sears woke up and said "We don't need that mail order business". Sears is now paying the price for that decision. Apple was born as a computer (Mac) company. One morning someone at Apple woke up and said "we don't need Macs". I fear Apple too will pay the price for that decision.
8 months ago
So the guy overseeing Siri Development is promoted to Senior Vice President for Machine Learning and AI? Yup, Tim needs to go. :apple:
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