Tim Cook Steps Aside – What's Next for Apple
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What is the main topic discussed in this episode?
Apple's about to get new leadership. This is Motley Fool Money.
Welcome to Motley Fool Money. I'm Tyler Crowe. Today, I'm joined by longtime Fool contributors, Matt Frankel and Lou Whiteman. We've been asking for questions from listeners all along. First, thanks to everyone who's been sitting, we love it and we're getting a ton of them. We're going to actually tackle a couple of mailbag questions today related to the SpaceX IPO and our thoughts on AST Space Mobile. But first, we want to discuss the big news that came out yesterday, and that's Tim Cook is stepping down. Yesterday, Apple announced a transition plan where Cook will become the executive chairman of Apple, and John Ternes, who was the head of engineering for hardware, will take over for the CEO role starting in September.
Now, I'm not going to say this came completely out of the blue. Cook had been the CEO for close to 16 years, He was in operating roles at the company since the dot-com days. There were some breadcrumbs that Ternus would be the next in line. For a company that seems like a rock of stability, it had quite a few retirements and transitions in the C-suite over the past year. Less than a month ago, there was a long Bloomberg article published that was talking about Ternus being the heir apparent. Now, we're not eulogizing Cook here. But as we think about Apple under Tim Cook's leadership, what do you see as his lasting legacy, Lou? Stability. He kept the plan on course.
Simple as that.
Aside from the stock price performance, which I'm sure we'll talk about more in a little bit, he had some pretty decent achievements. I think he'll be remembered as a highly effective CEO. Just looking at what he accomplished, Apple's profits are up about 700% since he took over. He's known for stability, like Lou said. He took the existing products, the iPhone, the iPad, that were successes before he took over, and they're still successful. But he made Apple into the leading smart wearables company with the Apple Watch and AirPods, those launched under his watch. They're not just handheld electronics anymore. But I think the most significant part of his legacy is the growth of Apple's service business, which is now the most profitable part of the company.
Under Cook's leadership, Apple built some highly successful subscription products. They were still on iTunes, pay-per-song business model when he took over. He led the Apple Music thing, for example. Apple now has more than one billion paid subscriptions throughout its ecosystem. Service revenue was about 5% of the business when Cook took over. It's more than 25% today. It's not all positive. He has the legacy of being behind the curve of AI innovation. That's, in my mind, one of the biggest challenges for new leadership. But in all, I think he was a very effective CEO.
What are Tim Cook's major accomplishments at Apple?
Yeah, on that profits going up thing, since Tim Cook took over and it was September of 2011, shares of Apple on a total return basis has generated about 3,100% returns for investors, compared to 731% for the S&P 500 on a total return basis. So, absolutely speaking, Cook's tenure has been a resounding success for anyone invested in the company. And one thing we can say about Apple under Cook, it's been an outstanding operator. that's not really surprising. He came from the operations side. You think about supply chain management, and as Lou, you said, keeping the things steady, keeping the trains running on time has been really Cook's strongest suit. But I think if there was a mild critique, and I know, Matt, you highlighted the wearables and the service revenue and stuff like that.
I would say the critique that A lot of people have had of Apple over the years, despite all of the success. Not everyone can be happy, right? There was this mild grumbling that some of its more recent developments and progress were like incremental gains instead of like these revolutionary products like we had with the iPhone. And the iPhone was like... by all accounts, a resounding success that transformed the way we think about mobile, everything like that.
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Chapters
5 chapters
1
What is the main topic discussed in this episode?
0:05–3:04
2
What are Tim Cook's major accomplishments at Apple?
3:04–7:23
3
What challenges will Jon Ternus face as Apple's new CEO?
7:23–15:47
4
How has Tim Cook's leadership impacted Apple's stock performance?
15:47–19:38
5
What is Tim Cook's legacy in terms of product innovation?
19:38–23:02