startups: Apple’s new CEO cuts managers to ship products faster
Apple's new CEO, John Ternus, is rapidly overhauling the company's structure by cutting management layers and budgets to accelerate product development, Bloomberg reports. Weeks after taking over from Tim Cook, Ternus seeks a leaner organization, greater agility in launches, and a more experimental approach to AI. A plan to replace 5,000 AppleCare staff with AI is currently on hold.
Apple’s new chief executive, John Ternus, is implementing a significant restructuring aimed at accelerating product development and streamlining operations, Bloomberg reported on Tuesday. Taking the reins on September 1 after Tim Cook’s 15-year tenure, Ternus, 51, seeks to reduce management layers, adjust budgets, and foster a more experimental approach, particularly in the burgeoning AI landscape.
Streamlining Operations and Managerial Cuts
The overhaul includes dismissals of engineering program managers within Apple’s hardware engineering group, with about half a dozen directors among those affected. These individuals have a limited timeframe to secure alternative positions within the company or face layoffs later this year, according to Bloomberg. The move signals Ternus’s intent to remove layers of middle management and foster a leaner organizational structure.
Budget Reductions and Internal Changes
Beyond managerial adjustments, Apple has also implemented small budget cuts across various teams, including Siri, Vision Pro, AI software, and Fitness+. Planned budget increases for 2027 have been scaled back, headcount is being held flat, and marketing expenditures have seen reductions. Internally, even perks like bringing plus-ones to holiday parties have been curtailed, reflecting a new era of fiscal tightening.
An unnamed source familiar with the situation told Bloomberg that the current environment is significantly more “hands-on” and “hectic” than in previous times. This sentiment underscores the intensified focus on efficiency and direct oversight under Ternus.
Rethinking AppleCare and AI Integration
A previously drafted plan to lay off approximately 5,000 AppleCare support workers and replace them with AI agents has been put on hold. While Apple is not currently pursuing such a large-scale displacement, the company already utilizes a generative AI assistant for initial customer calls to its AppleCare line in the US and Canada. This development follows Apple’s decision to increase AppleCare+ prices in July.
Navigating Financial Headwinds and Seeking New Revenue
The company faces financial pressures, including rising costs for memory chips, which Apple is partially absorbing. Services revenue experienced its first quarter-over-quarter decline since 2022 in the June quarter, adding urgency to the strategic shifts. In response, CEO Ternus, alongside services chief Eddy Cue and chief financial officer Kevan Parekh, are actively exploring new avenues for revenue generation. Notably, Cue recently took over leadership of the App Store from Phil Schiller in an August reshuffle.
Ambitious Product Pipeline
Despite the internal reconfigurations, Apple’s product pipeline remains ambitious under Ternus's leadership. Bloomberg reports plans for AirPods equipped with cameras, Apple’s inaugural smart glasses, and a special 20th-anniversary iPhone, all slated for release next year. This month, Ternus also unveiled his first major product lineup, highlighted by the debut of the iPhone Duo foldable, carrying a price tag of $1,999.
Implications for Apple's Future
This series of strategic decisions by John Ternus suggests a push for greater efficiency, faster innovation cycles, and a sharper focus on emerging technologies like AI. By reducing organizational friction and encouraging a more experimental mindset, Apple appears to be positioning itself to respond more dynamically to market demands and competitive pressures in the post-Cook era, even as it navigates economic challenges and aims to diversify its revenue streams.
FAQ
Q: Who is Apple's new CEO and when did he take over?
A: John Ternus, 51, became Apple's chief executive on September 1, 2026, succeeding Tim Cook, who had served for 15 years.
Q: What is the main goal of the changes implemented by CEO Ternus?
A: According to Bloomberg, Ternus aims to reshape Apple to release products more often, cut layers of management, become leaner, and be more experimental, particularly in the AI era.
Q: Is Apple replacing its AppleCare staff with AI?
A: A previously drafted plan to lay off approximately 5,000 AppleCare support workers and replace them with AI agents is currently on hold. However, Apple already utilizes a generative AI assistant for initial calls to its AppleCare line in the US and Canada.
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