Apple CEO in-waiting Jeff Williams is a Tim Cook clone. We argue that Apple’s next Chief Executive ought to be a risk-taking, product-focused CEO that conducts him/herself with a sense of urgency to drive Product & Services growth. Another caretaker CEO would be less than optimal.
Companies mentioned: Alphabet (GOOG), Amazon (AMZN), Apple (AAPL), Cerner (CERN), Disney (DIS), Tesla (TSLA). Related videos and TEK2day Podcast content at end of article.
Apple CEO Tim Cook’s tenure could accurately be described as having delivered consistent operating results with incremental product innovation. This is what one would expect from a caretaker CEO. Perhaps a caretaker CEO was what Apple needed most in an immediate successor to founder Steve Jobs in order to capitalize on the product family – iPhone, iPad and Mac – that Jobs left behind. Apple would now best be served by a CEO capable of driving significant product innovation to help differentiate Apple from a robust competitive landscape that includes other Technology behemoths as well as disruptive startups.
Who is on deck?
If Apple is in fact a “Software & Services” company, why not appoint Software Engineering head Craig Federighi as the company’s next CEO rather than Mr. Williams? Mr. Federighi’s second stint at Apple began in 2009 and his tenure has been marked with increasing operating responsibilities. Similarly, if the Apple Car/ Project Titan is slated to become the next big thing at Apple, perhaps Project Titan leader John Giannandrea ought to be named CEO in a few years as that project gains traction. Mr. Giannandrea’s performance over the next several years will do much to influence the Board’s opinion of him.
Our primary issue with Tim Cook is that he is slow to act and overly risk averse.
Content: Apple was slow to wade into the content space and ultimately did so with a walled garden approach to gaming and a slim newspaper & video content bundle. “Don’t worry, Apple will eventually acquire Disney to beef up its content bundle” has long been the rumor. We advocated that strategy several years ago before Disney embarked on its direct-to-consumer (“DTC”), effort. Given the robust slate of content Disney has coming down the pike over the next few years, why would the company sell to Apple in the near future? Disney’s DTC business could very well sport a Trillion dollar market cap within 3-5 years. Also, Apple’s approach to exploring large M&A deals could use refining.
Healthcare IT: Apple dipped its toe into the healthcare waters earlier this decade with its Apple Health initiative. AAPL partners with Cerner and other healthcare IT vendors. Question: “Do consumers know that they may access their electronic health records (“EHR”) via their iPhones?” Does Apple understand the EHR space at a granular level under Dr. Ricky Bloomfield? Why not acquire Cerner and bring EHR technology and domain expertise in-house?
Apple Car/Project Titan: Then there is the long rumored Apple Car – codenamed “Project Titan”. Tesla CEO Elon Musk confirmed that he did in fact reach out to Tim Cook in late 2017 or early 2018 about acquiring Tesla as was rumored. Cook wouldn’t even take a meeting. Rather than explore and build a relationship with Musk, Cook froze. Now, any potential acquisition in the Electric Vehicle and/or Autonomous Vehicle space will carry a lofty valuation, unless the bubble pops before Apple decides to pursue an acquisition. In the interim, Apple has lost ground to not only Tesla, but Alphabet’s Waymo unit (the AV leader), as well as Amazon with its Rivian investment and other AV acquisitions such as Canvas Technology.