Today is John Ternus's first day on the job at Apple. To mark the occasion, he created a profile on X, and within three hours of posting "hello," he already had 300,000 followers.
His instant stardom is largely a credit to his predecessors, who created the world's biggest device company. Steve Jobs built the company that defined how humans used computers for four decades. Tim Cook scaled it massively thanks to his supply-chain brilliance.
So what is the company Ternus inherits? And can he keep its incredible rise going?
Apple's market capitalization sits at nearly $4.8 trillion, just below its late July peak. It is a massive number that translates to more than 30 times next year's expected profit, well over the earnings multiple of the broader S&P 500 index at 20 times. That is despite an earnings growth rate that is actually slower than the broader market's.
Why the premium? Because, in an age of anxiety over whether AI can deliver promised returns for investors, Apple's business grows reliably and throws off consistent profit. For Ternus the challenge is obvious: It is tough to grow a company that begins at such a lofty height.
Apple's biggest business, of course, is the iPhone. From the time Jobs launched it in 2007 to Cook's first year at the helm, Apple's revenue skyrocketed from $24 billion to $157 billion. And it has continued its climb from there. In Cook's first year, Apple sold 125 million iPhones. This year Apple will sell around 260 million.
Just as significant, the average price Apple charges for iPhones will be around $970 this year, according to Visible Alpha estimates, compared with $630 in Cook's first year. That 53% boost in the price beats inflation, running at 47%.
Convincing consumers to pay more for consumer electronics isn't easy. Take computers: The first Apple II retailed for $1,298 in 1977, equal to about $7,000 today. A new MacBook Air this year? $1,299, after a $200 price hike this summer.
Can Ternus keep boosting iPhone volumes and average prices? Prices are certainly going up, as Apple has already flagged, due to spiking costs for memory and storage chips that are inside each device. Yes, iPhones are somewhat price inelastic, as economists might say: Consumers rely on them so much they'll eat higher costs, though they might decide to upgrade less often.
But Apple will have something new-and very expensive-to entice them when it releases the latest iPhone models on Sept. 9: a foldable phone.
To keep people excited about iPhones in the age of AI, Apple will need to make its device do more. It is releasing an updated Siri AI that will be a significant upgrade over previous versions of the iPhone assistant, though that merely gets it closer to more sophisticated chatbots already available from OpenAI and Anthropic.
Cook's biggest win for shareholders might have been scaling Apple's services business so much. The gross profit margins for devices are around 40%. For services, they top 75%. This business includes sales of apps where Apple collects as much as 30% fees on in-app purchases. Perhaps its best business has been collecting over $20 billion annually from Google to make the search engine the default in Apple's Safari browser. That is essentially all profit.
The services business might already be slowing as Ternus takes over the corner office, after a California judge forced Apple to reduce its App Store fees.
What Apple observers are hoping for from Ternus is that he can release innovative devices. The foldable iPhone is a start. But is there a revolutionary new device Apple can deliver that moves us past the smartphone era? How long can we all stare at hand-held rectangles? Innovation didn't die under Cook. The Apple Watch, first released in 2015, is hugely popular, as are the AirPods that first appeared a year later.
The bar for Ternus is higher.