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Apple Executive Shake-Up Readies It For Life After The iPhone



The changes, which can be traced back to last year, have included high profile hires, noteworthy departures, meaningful promotions and consequential restructurings. They have rattled rank-and-file employees unaccustomed to frequent leadership changes and led Apple to put several projects on hold while new managers are given the opportunity to reassess their priorities, according to people familiar with the matter.

The main reasons for the shifts vary by division. But collectively, they reflect Apple's efforts to move from an iPhone-driven company to one where growth flows from services and potentially transformative technologies.

Leadership moves of the past few months include the promotion of artificial intelligence chief John Giannandrea to the executive team; replacing departing retail chief Angela Ahrendts with head of human resources Deirdre O'Brien; and pushing out top Siri's voice-assistant executive Bill Stasior.

Apple has also trimmed 200 staffers from its autonomous vehicle project, and is redirecting much of the engineering resources in its services business, led by Eddy Cue, into the efforts of Hollywood programming.

 Eddy Cue, who was Apple's sole head of services, focusing a lot of his engineering team on developing company's media offerings, including Apple's coming Hollywood programming.

Eddy Cue, who was Apple's sole head of services, is focusing a lot of his engineering team on developing company's media offerings, including Apple's coming Hollywood programming.


Photo:
            

        David Paul Morris / Bloomberg News
          

"Gene Munster, a long-time Apple analyst and managing partner at the venture capital firm Loup Ventures, said Geneva Munster," This is a sign that the company is trying to get the formula right for the next decade. " "Technology is evolving, and they need to continue to tweak their structure to be sure they're on the right curve."

The changes, along with Apple's recent sales woes, have become a conversation fodder for current and ex-Apple employees. , partly because they are among the most pronounced since Tim Cook's early years as chief executive. Retail chief Ron Johnson left shortly before Mr. Cook took over in 2011, and mobile software executive Scott Forstall was dismissed a year later. Their departures led to the hiring of Ms. Ahrendts, the elevation of Craig Federighi to the top software job and Mr. Cue's assumption of responsibility for several services, creating a 11-person executive team that remained largely unchanged for five years.

The competitive landscape could complicate Apple's efforts to diversify beyond the iPhone. Media services like

            Netflix
             Inc.

      and Spotify Technology SA have a good start and more subscribers; Google's autonomous vehicle initiative has logged more miles on the road; and

            Amazon.com
             Inc.'s

      Echo speakers have put Alexa into millions of homes.

Apple spent $ 14.24 billion on research and development last year, a 23% increase from the prior year. Though it continues to work on projects in the incremental reality, autonomous vehicle and health sectors, it has not yet released a major new product in these areas. Sales of its latest gadgets-Apple Watch, AirPods and HomePods-have been mixed, and none has offered the pricing power or volumes of the iPhone, one of the best-selling products in history.

 Apple's focus on services coincides with a The decision to replace its retail chief, Angela Ahrendts, after her five years overseeing the 500-plus Apple stores worldwide.

Apple's focus on services is coinciding with the decision to replace its retail chief, Angela Ahrendts, after her five years overseeing 500 -plus Apple stores worldwide-wide.


Photo:
            

        Patrick T. Fallon / Bloomberg News
          

Mr Cook, who prides himself on his long-term management focus, has been anticipating the maturity of the smartphone industry since as early as 2010 and planning for how to grow as phone sales slowly, says former employees. Apple this year has stopped reporting the number of iPhones it sells, and many observers are interpreted as an end of the smartphone's salad days.

Though the iPhone still contributes about two-thirds of Apple's sales, the company has encouraged investors to focus on a growing service business, which includes streaming-music subscriptions, app store sales and mobile payments. Services are expected to top $ 50 billion in sales by fiscal 2020 and contribute more than 60% of Apple's total revenue growth over five years, according to

            Morgan Stanley
            

      which estimates the iPhone fueled 85% of the growth over the past five years.

The services business is also key to maintaining the iPhone's loyalty. Apple executives view their mobile payments, music service and coming video offerings as ways to encourage current iPhone owners to buy future Apple handsets.

Apple has said it Apple aims to pass 500 million paid subscriptions across its platform by 2020, up from 360 million now.

To help reach the goal, Apple is spending more than $ 1 billion to create original shows this year with Hollywood A-listers such as Reese Witherspoon . It has considered bundling video for a monthly subscription offering that would also include cloud storage, according to people familiar with the plans. The company also is in talks with major newspapers about offering a news service that would cost $ 10 a month.

 Apple's human resources manager, Deirdre O'Brien, has taken responsibility for the retail division's oversight. "It has discussed the bundling of those services together in a single subscription along with iCloud storage for photos and files, a person familiar with the plan said. "title =" Deirdre O'Brien, Apple's head of human resources, took responsibility for overseeing the retail division. "/>
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          <span class= Deirdre O'Brien, Apple's head of human resources, took responsibility for overseeing the retail division.


Photo:
            

        Apple
          

Mr Cue, who has poached two top executives from Sony Pictures Television in 2017, has focused most of his engineers on the upcoming video offering, two of these people said. The company is pushing to announce a new offering at a media event scheduled for March 25th on its Apple Park campus, people familiar with the event said.

Apple is also expected to lean on its artificial intelligence team to personalize services on people's devices. The company last year hired Mr. Giannandrea away from Alphabet Inc.'s Google, where he held a similar role involving AI in products like the Gmail inbox app.

In December, shortly after presenting to Apple's board, Mr. Giannandrea was promoted to the company's executive team and quickly took over the AI ​​division. He relieved Mr. Stasior of his responsibility overseeing Siri, Apple's flagship AI product, according to people familiar with the change. Mr. Giannandrea has assumed that responsibility and is looking to improve Siri's accuracy and performance, the people said. The information previously reported to Mr. Stasior's status.

In August, Apple hired Tesla Inc.'s engineering chief Doug Field and gave him day-to-day responsibility for the company's roughly 1,400-person autonomous-vehicle project, known as Project Titan. Last month, he cut the team by about 200 people, according to people familiar with the change, which previously reported by CNBC.

Apple announced in early February that Ms. Ahrendts would leave the company in April, ending a five-year stint overseeing its 500-plus worldwide stores. Mr. Cook promoted Ms. O'Brien, a longtime operations executive, into a role of completing Ms. Ahrendts's store remodeling and determining how Apple promotes services in stores. One planned initiative: Apple has promised the production partners in Hollywood that it will install TVs in stores to showcase its slate of forthcoming shows,

Write to Tripp Mickle at Tripp.Mickle@wsj.com

Corrections & Amplifications
Eddy Cue poached two top executives from Sony Pictures Television in 2017. said the poaching took place last year. (Feb. 18, 2019)


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