Apple Executive Shake-Up is preparing for life after the iPhone



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The changes, which date back to last year, included high-profile recruitments, remarkable departures, significant promotions and significant restructuring. They moved core employees who were not accustomed to frequent changes in management and led Apple to suspend several projects while the new leaders had the opportunity to reevaluate priorities, according to people close to the file.

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

Among the initiatives taken by leaders in recent months include the promotion of Artificial Intelligence Chief John Giannandrea to the management team; replacement of Angela Ahrendts, Retail Manager, Deirdre O'Brien, Human Resources Manager; and kick out Bill Stasior, Siri's vocal assistant executive.

Apple has also reduced its stand-alone vehicle project by 200 employees and is redirecting much of the engineering resources of its service business, led by Eddy Cue, to Hollywood-focused efforts.

Eddy Cue, who was the sole person responsible for Apple's services, focuses a large part of his engineering team on developing the company's media portfolio, including Apple's upcoming Hollywood program.

Eddy Cue, who was the sole person responsible for Apple's services, focuses a large part of his engineering team on developing the company's media portfolio, including Apple's upcoming Hollywood program.

Photo:

David Paul Morris / Bloomberg News

"This is a sign that the company is trying to find the right formula for the next decade," said Gene Munster, a long-time analyst at Apple and managing partner of venture capital firm Wolf Ventures. "The technology is evolving and they must continue tweaking their structure to be sure they are on the right curve."

The changes, as well as Apple's recent sales issues, have become a topic of conversation for current and former Apple employees, in part because they are among the most pronounced since Tim Cook's early days. as general manager. Chief retailer Ron Johnson left shortly before Cook took office in 2011, and Scott Forstall, head of mobile software, was fired a year later. Their departures led to the hiring of Ms. Ahrendts, the elevation of Craig Federighi to the forefront of software and the assumption of several services by Mr. Cue, creating a management team of 11 people who are remained virtually unchanged for five years.

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

Netflix
Inc.

and Spotify Technology SA have a length of advance and more subscribers; Google's autonomous vehicle initiative has traveled more miles on the road; and

Amazon.com
Inc.

The echo speakers have put Alexa in millions of homes.

Apple spent $ 14.24 billion on research and development last year, an increase of 23% over the previous year. Although he continues to work on projects in the areas of augmented reality, autonomous vehicles and health, he has not yet released any major new product in these areas. Sales of its latest gadgets – Apple Watch, AirPods and HomePod – 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 the decision to replace its chief of commerce, Angela Ahrendts, after five years of overseeing more than 500 Apple stores around the world.

Apple's focus on services coincides with the decision to replace its chief of commerce, Angela Ahrendts, after five years of overseeing more than 500 Apple stores around the world.

Photo:

Patrick T. Fallon / Bloomberg News

Cook, who is proud of his long-term management strategy, anticipates maturing of the smartphone industry since 2010 and planning growth as phone sales slow down, say former employees. This year, Apple has stopped reporting the number of iPhones sold, a move that many observers have interpreted as an end of the smartphone salad days.

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

Morgan Stanley
,

which estimates that the iPhone has fueled 85% of growth over the previous five years.

The service sector is also essential to preserve the fidelity of the iPhone. Just as Amazon used media and music offerings to increase the value of the premium subscription, Apple executives are considering mobile payments, music service and future video offerings as a way to encourage owners of current iPhone to buy their future Apple handsets.

Apple has announced plans to place 500 million paid subscriptions on its platform by 2020, up from 360 million today.

To achieve this goal, Apple spends more than $ 1 billion to create original series this year with Hollywood stars such as Reese Witherspoon. He envisioned integrating the video into a monthly subscription offer that also includes cloud storage, according to people familiar with the packages. The company is also in talks with major newspapers to offer an information service that would cost $ 10 a month. He mentioned the possibility of bundling these services into a single subscription, as well as iCloud storage for photos and files, said one familiar with the plan.

Deirdre O. Brien, human resources manager at Apple, was responsible for overseeing the retail division.

Deirdre O. Brien, human resources manager at Apple, was responsible for overseeing the retail division.

Photo:

Apple

Cue, who brought two senior executives from Sony Pictures Television last year, focused most of his engineers on the next video offer, two of them said. The company is pushing to announce the new offer at a media event scheduled for March 25 at its Apple Park campus, say people familiar with the event.

Apple should also rely on its artificial intelligence team to customize services on personal devices. Last year, the company hired Giannandrea out of Google, where he played a similar role, integrating AI into products such as Gmail's instant messaging application.

In December, shortly after his presentation to Apple's board of directors, Mr. Giannandrea was promoted to the company's management team and quickly took over the AI ​​division. He has relieved Mr. Stasior of his oversight responsibilities for Siri, Apple's flagship artificial intelligence product, according to people familiar with the change. Giannandrea has taken on this responsibility and is seeking to improve Siri's accuracy and performance, said the interviewees. Previously reported information on Mr. Stasior's status.

In August, Apple hired Doug Field, Technical Manager of Tesla Inc., and entrusted him with the day-to-day responsibility for the company's self-driving project, of approximately 1,400 people, known as Project Titan. Last month, he cut the team of about 200 people, according to people familiar with the change previously announced by CNBC.

In early February, Apple announced that Ahrendts would leave the company in April, ending its five-year mandate to oversee its approximately 500 stores around the world. Mr. Cook proposed to Ms. O'Brien, the long-time operations manager, to complete the renovation of Ms. Ahrendts' stores and determine how Apple was promoting the in-store services. A planned initiative: Apple has promised its production partners in Hollywood to install TVs in stores to present its catalog of upcoming shows, said people familiar with these projects.

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

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