Save StorySave this storySave StorySave this story<\/p>\n
Tim Cook\u2019s tenure as CEO at Apple, which is coming to a close September 1, will likely be defined by operational efficiency and financial growth, ushering Apple into its trillion-dollar era.<\/p>\n
But his most significant achievement might be in doubling down on Apple\u2019s services business, which includes iCloud, the App Store, Apple Music, Apple TV+, News+, and more. It\u2019s the subscription layer on top of iOS, and almost all of the service apps are tightly integrated with Messages, the glue that keeps people stuck to their iPhones.<\/p>\n
During Apple\u2019s most recent earnings report, for the quarter ending December 2025, its services business reached an all-time revenue record of $30 billion. This was a 14 percent jump from the same quarter the year prior; services was also a bigger money-making business than Mac, iPad, Apple Watch, Home, and other accessories combined. For the entirety of fiscal year 2025, Apple services generated more than $109 billion for Apple, again, up 14 percent from 2024.<\/p>\n
When Cook first took over as CEO in 2011, \u201cservices\u201d weren\u2019t even broken out into a separate revenue category, although, for proxy, iTunes was generating around $6 billion annually.<\/p>\n
As the analyst Ben Thompson points out, some of the foundation-laying work for Apple\u2019s services predated Cook\u2019s term as CEO. The App Store launched in 2008, the year after Steve Jobs unveiled the iPhone, and it was Jobs\u2019 foresight to charge up to a 30 percent \u201ctax\u201d on paid apps and in-app purchases. Jobs loyalists Phil Schiller, who now serves as an Apple \u201cfellow,\u201d and Eddy Cue, who is the company\u2019s senior vice president of services, were the driving forces behind this strategy. (Schiller is the exec who famously changed the developer tax\u2014slightly\u2014in 2016, to make it more favorable to app makers, in response to complaints that Apple was unfairly squeezing developers.)<\/p>\n
But it was under Cook that Apple transitioned from the world\u2019s most popular consumer hardware company to one of the world\u2019s most powerful platform companies. And that was due in large part to services. The question now is whether Apple executive John Ternus, who will soon take the helm as CEO, can extend Apple\u2019s platform into the generative AI era. So far, Apple\u2019s approach to advanced AI\u2014specifically generative AI, since Apple has wielded machine learning in all kinds of clever ways for years now\u2014has been mystifying.<\/p>\n
Apple\u2019s virtual assistant Siri, considered innovative when it first launched in 2011, has been plagued by errors, limitations, and general haplessness. In 2024 the company announced \u201cApple Intelligence,\u201d a new moniker for AI features that would be embedded into products like Siri. But after postponing the release of an AI-enhanced Siri in 2025, Apple executives working on AI began to exit the company. Robby Walker, a senior executive working on AI, left in October of that year. In late 2025, Apple\u2019s head of AI, John Giannandrea, stepped down. Following Giannadrea\u2019s departure, longtime Apple software chief Craig Federighi reportedly took charge of Siri.<\/p>\n
Ternus\u2019 chops are in hardware. He\u2019s been Apple\u2019s senior vice president of hardware engineering since 2021. Prior to that, Ternus was a vice president of engineering, and joined the company\u2019s product design team in 2001. A hardware executive is not the most obvious choice for guiding Apple as it figures out where it stands on LLMs, inference learning, Siri-as-a-chatbot, hallucinations, AI privacy implications, vibe coding, and more.<\/p>\n
Except Ternus himself has also been in charge of one of the most essential platforms<\/em> for future Apple: its chips business. Ming-Chi Kuo, the famed Apple analyst, pointed out on X that Ternus\u2019 most important move in recent years \u201cwas leading the Mac transition from x86 (Intel) to ARM (Apple\u2019s own Apple Silicon).\u201d This was a \u201csystem- and platform-level transition, essentially a brain transplant\u201d that required \u201ca very high level of execution and tight cross-functional coordination.\u201d Without this, Kuo continues, Apple wouldn\u2019t have the hardware position it has now as it readies for AI devices.<\/p>\n That kind of coordination is exactly what building and shipping complex AI products will require\u2014a platform approach, not a product approach. And so will the next generation of Apple\u2019s services. If iOS was the foundation layer for all of the services Apple customers used over the past two decades, then Apple\u2019s chips and Apple Intelligence could be the foundation for the next two.<\/p>\n As the CEO of Apple, Ternus will have to figure out how AI is productized through the company\u2019s services. There\u2019s the embedded approach, in which the AI is mostly being used to juice app experiences, similar to the way that Meta is building AI to maximize its ad revenue. Apple is already toying with some of this; users can create custom emoji in Messages and generate new playlists in Apple Music using AI-friendly prompts. And Apple, despite beliefs to the contrary, does<\/em> have an advertising business, through search in its App Store. Advanced AI could be useful there.<\/p>\n Then there\u2019s the partner approach, which Apple is already pursuing. The company has a multiyear deal with Google to embed Google Gemini into Apple products. If this latest tie-up is as lucrative as Apple\u2019s Safari search deal with Google has been, Apple might do just fine in generative AI in the near term.<\/p>\n And then there\u2019s the possibility Apple still has tricks up its sticky sleeves in terms of building the container for generative AI itself, whether that\u2019s a finally capable Siri, a software system that actually improves people\u2019s working lives, or a new piece of hardware.<\/p>\n Or, Apple services with Apple Intelligence could look like something else entirely. A brand-new kind of AI services glue. It\u2019s Ternus\u2019 move now.<\/p>\n","protected":false},"excerpt":{"rendered":" Save StorySave this storySave StorySave this story Tim Cook\u2019s tenure as CEO at Apple, which is coming to a close September 1, will likely be defined by operational efficiency and financial growth, ushering Apple into its trillion-dollar era. But his most significant achievement might be in doubling down on Apple\u2019s services business, which includes iCloud, […]<\/p>\n","protected":false},"author":1,"featured_media":49403,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[36],"tags":[],"class_list":{"0":"post-49402","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-business"},"_links":{"self":[{"href":"https:\/\/agooka.com\/news\/wp-json\/wp\/v2\/posts\/49402","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/agooka.com\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/agooka.com\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/agooka.com\/news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/agooka.com\/news\/wp-json\/wp\/v2\/comments?post=49402"}],"version-history":[{"count":0,"href":"https:\/\/agooka.com\/news\/wp-json\/wp\/v2\/posts\/49402\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/agooka.com\/news\/wp-json\/wp\/v2\/media\/49403"}],"wp:attachment":[{"href":"https:\/\/agooka.com\/news\/wp-json\/wp\/v2\/media?parent=49402"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/agooka.com\/news\/wp-json\/wp\/v2\/categories?post=49402"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/agooka.com\/news\/wp-json\/wp\/v2\/tags?post=49402"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}