Jony Ive is leaving Apple
30 June 2019 (Paris, France) – It’s no exaggeration to say that Jony Ive was instrumental in the rebirth of Apple, and after an epic run of more than 20 years, he’s stepping down. But if you’ve followed my posts on Apple over the past 2+ years, you know Ive’s departure was long planned, beginning when he was “promoted” to Chief Design Officer. After that promotion Ive wasn’t driving product decisions, nor was he involved in day-to-day decisions or even managing reports. This gradually became obvious as he faded into the shadows, as he stopped narrating video introductions of new products or doing media interviews.
According to Apple sources over the weekend, Ive grew tired of designing gadgets, particularly within the confines of an existing company, with a predictable product cycle. And listen, in this business 20 years is a long time. In an interview with The New Yorker four years ago, he had already alluded to “growing bored”, with more interest in “doing things in the physical world”.
As Jonathan Blodgett (a chap who follows the mobile world very closely and with whom I meet for a beer or two or three at the Mobile World Congress every year) noted in his blog over the weekend, Ive and his team, the Industrial Design Group (IDg), created some of the most iconic gadgets of all time. From the iPod to the iPhone, which both redefined the industry, he had a track record of creating beautiful, boundary-pushing, yet functional products alongside Steve Jobs. In later years, after Jobs died, there were clear shifts toward luxury products that imitated high-end goods, with ever rising prices, and … less functional realities. We saw a shift toward products like the 24-karat gold Apple Watch, laptops with butterfly keyboards that still don’t work, and a huge split in the iPhone (Xs, Xs Plus and XR), designed to drive customers toward the higher end models.
I don’t think Ive alone was responsible for this shift toward the high end. As Owen Williams noted (he writes a blog Recharged every weekend which is a nice briefing of “what you may have missed last week” plus “stuff to watch this coming week” on the ridiculously busy tech space):
I think it was the balance vacuum that Steve Jobs left, which lead to the IDg group doing as it pleased, and Tim Cook saying “ok, go ahead”. Apple insiders say IDg has been the most powerful group at Apple but that began to wane as services began to become more important. People talk about the “Steve Jobs” era and “Tim Cook” era, but in reality, there was only the “Jony Ive” era at Apple. That will now change.
But, why is the legendary designer leaving now? Well, the press releases tell us that it’s because Jony Ive is building his own agency, LoveFrom, with Apple as a first client – which stands out as a suspicious thing to say. What company brags about losing key talent … and switching to paying consultancy fees? But it’s unlikely Jony Ive will really have much of a say at Apple at all, even as a client. This was a stage-managed exit, because Apple knows that losing such a key executive could spook investors. From that The New Yorker article I noted above:
He’s uncomfortable knowing that a hundred thousand Apple employees rely on his decision-making – his taste – and that a sudden announcement of his retirement would ambush Apple shareholders. So his departure will need to be well-planned and timed.
Ive is likely ready for a change. For Apple, the time is right for change as well. As I have noted in previous posts, Apple has been making the transition from being a big hardware player to a services business. Most of the tech giant’s hardware products in recent years have been “evolutionary” instead of “revolutionary”.
But it has made several key moves over the last year via new offerings to “juice” growth elsewhere in the business. Company earnings calls and press releases talk more about its growing base of active devices which the company says can be used to squeeze out more revenue through its digital services like Apple Music, App Store sales, extra iCloud storage, and the new subscription/streaming services.
But it’s not just about those subscription services. Apple has made several shifts in recent months that signal its preparing to move beyond the iPhone in other ways, such as artificial intelligence, the growing smart home market and digital health monitoring. It has poached key executives from Amazon and Google who led those companies in their artificial intelligence efforts, and hired a new boss for its smart home division, which it also revamped.
Its biggest redirection has been in retail. Apple’s head of retail Angela Ahrendts announced in April her plans to leave the company after five years in the role. Ahrendts was one of Cook’s biggest hires, and she has spent her time at the company transforming Apple’s retail locations into hubs for hanging out and taking classes related to Apple products, not just selling and repairing stuff for customers. Those moves were a huge success.
But now Cook appointed Deirdre O’Brien, a 30-year Apple veteran and head of the company’s human resources, to run the company’s retail operations on top of her HR role. Said Bloomberg Tech last week “It’s the biggest shakeup at the top of Apple’s executive ranks in years”. And the reason is Apple’s retail locations will be used as a showcase for Apple’s video subscription offerings by placing TVs in stores that will display clips from its original programming. Last month my CTO got an invite to the opening of Apple’s new flagship store in Washington, D.C. and he said “the space is gorgeous, it had all the bells and whistles on display, and that store will now be the model when they revamp the other stores. Apply really knows retail”.
Much, much more important is health. The Apple Watch, with its heart and activity monitoring, is at the center of the company’s digital health strategy, but its ambitions go beyond that. In interview after interview Cook has said that health will be a key driver of the company’s growth in the years to come. From an interview I watched last week:
We are taking what has been with the institution and empowering the individual to manage their health. And we’re just at the front end of this. But I do think, looking back, in the future, you will be able to say Apple’s most important contribution to mankind has been in health.
The latest Apple Watch can perform an EKG reading that can identify potential heart problems. It can also identify if the wearer falls and give them the option to call emergency services if they’re in trouble. Beyond that, Apple has started to partner with health insurers like Aetna to offer free or discounted Apple Watches if the customer keeps up with certain fitness goals.
All of this comes under a new umbrella, “Apple Services”. Mobile analyst Michael Walkley (of Canaccord Genuity Capital Markets) probably provides the most thoughtful, measured, “non-hype” analysis of this market (well worth the hefty subscription price) and he believes the Services segment growth rate (just based on the current Apple user base and the subscription services launched or redone to-date) will be 17% in 2020 and yield over $59B in revenue. Not a bad piece of change.
