Apple’s executive changes hint at an even greater level of vertical integration to come

“On Thursday, Apple announced a number of executive shifts, including naming Jeff William as the new COO,” Aaron Tilley reports for Forbes. “Apple also announced that Johny Srouji is joining the executive team as senior vice president for hardware. Srouji, who’s best known for introducing Apple’s custom A-series chips for iPhones and iPads as well as the Touch ID fingerprint sensor, has a long history of chip engineering at Intel and IBM before joining Apple in 2008.”

“By bringing on Srouji as an executive, Apple will likely continue deeper down that path of vertical integration on all the components that go into making Apple products competitive, said chip analyst Patrick Moorhead,” Tilley reports. “‘Apple is going to be engaged with creating more of its own intellectual property,’ Moorhead said. ‘It wants to put more of its own IP into its products. IP has a seat at the table, where it had typically been fronted by product groups before. The A9 people’s seat at the table used to be through the iPhone and iPad. With Srouji, they now have a seat at the table. They get more time with Jony Ive and Tim Cook.'”

Apple “has emerged as one of the most important chip makers in the world — even though it only develops silicon for its own devices. Apple has pushed much of the chip industry forward. In 2013, for example, Apple’s A7 chip that came in the iPhone 5s was the first 64-bit processor in a smartphone, and that hit chip companies like Qualcomm hard. The San Diego chip maker had to scramble to come out with its own 64-bit product, leading to the disastrous Snapdragon 810 launch,” Tilley reports. “Now, with the A9x processor found in the recent iPad Pro, Apple has made another jump. The processor has been referred to as a ‘desktop-class’ chip. For years, there have been rumors that Apple is interested in cutting out Intel of its Mac computers. It appears Apple is closer than ever to achieving that dream with its recent advancements in processor technology.”

Read more in the full article here.

MacDailyNews Take: The more vertical integration, the better! So-called competitors will only fall further and further behind.

Microsoft finally realizes that Steve Jobs was right all along – October 30, 2015
Samsung will never overcome Apple’s advantage in mobile device profitability – July 30, 2015
Why Google and Microsoft couldn’t emulate the Apple mobile device model – July 9, 2015
J.P. Morgan analyst prefers ‘vertically integrated’ approach like Apple’s in smartphone market – March 26, 2010
Apple’s vertically integrated Mac could make interim Wintel model look like a detour – April 25, 2008
Apple has proven that vertical integration works better – October 24, 2006
Apple was right all along: vertical market quality trumps horizontal market woes – April 30, 2006

Global creative icon Tor Myhren leaves Grey for Apple – December 18, 2015
Apple assigns App Store oversight to Phil Schiller in apparent nod to developer issues – December 18, 2015
CEO Cook shakes up Apple’s management – December 17, 2015
Apple names Jeff Williams Chief Operating Officer, other executive additions and changes – December 17, 2015
Tim Cook takes full control of Apple: John Browett and Scott Forstall out; Jony Ive, Bob Mansfield, Eddy Cue and Craig Federighi get expanded responsibilities – October 29, 2012


      1.  sells some cool products, but they stopped being applebrave after Steve upgraded his habitat. Right?

         does not deserve my money anymore.
        Downgrading the appleshit is the coolest thing these days.
        Because the pencil is crucial but not included, available in 4 weeks?

        just in TIMe. You have gone too far.

        We are waiting for Eddy to take over, tiktak.

            1. How so?

              He doesn’t think Apple deserves his money, but you think he should still buy Apple products?

              Or you want Apple to sell him products without taking his money?

              Perhaps you don’t understand buying and selling?

              Calling other people dumb does not make you look smart!

        1. Just because you run a huge company does not mean you are always right!

          Are you nuts ?

          You must be the CEO we are all talking about.
          Something general first:
          An Apple CEO must be very different. Numbers are not that important as they are to other less innovative and less credible companies.

          Time is up Tim. Tim+ eis up. Time is up.

  1. The chip design is one of the key areas that Apple have excelled at in the last 5 years. They have acquired several companies with critical experience and it is really paying off.
    For me, that level of insight and planning is what makes Apple the leader in the industry. They have entered new areas and showed up the incumbent competition with amazing innovation and execution.
    One of the reasons that Apple come in for criticism about not being first to market is that they really think about what they want as a product and if existing technology does not fit the requirements then they will spend time and money to make it themselves.
    We need to keep reminding ourselves about that when products are in short supply at launch. A lot of the time it is because the components are cutting edge and ramping up production can be fraught with difficulties.
    Apple always take the long term view and sometimes that impacts short term success. Wall Street will never understand that.

    1. I like your POV. But there isn’t much of anyone out here in consumer world who’s going to appreciate products in short supply at launch. It’s cruisin’ for a bruisin’. Obviously, Apple had a time table to meet, the magic dates being in December for prezzies and perks.

        1. Those who are complaining about supply issues miss the point! It is for EXACTLY that reason the Apple are investing in the components – they will not be RELIANT on suppliers who can’t deliver.

          And, for those who criticise Tim Cook, remember he is a supply chain guy. He will be acutely aware of the demands Apple’s leading-edge designs place on suppliers and he is, in effect, leveraging Apple’s huge resources to BECOME the supply chain.

          Everyone wants Apple’s business so there is a great temptation to make promises that might be difficult to meet. Apple requires complete visibility of the suppliers’ material and manufacturing costs and imposes a skinny margin, but still expects promises to be kept. Clearly they have not been and it is possible, even likely, that analysts who learn of reduced orders to certain suppliers are wrongly interpreting this as a drop in Apple’s sales forecasts because Apple is moving business from suppliers who are not performing, or simply spreading the work around.

          The iPad pro keyboard and pencil supply constraints were, no doubt, caused by supplier difficulties producing the quality Apple insists on, at the rate that had been promised. Ditto for the watch at launch time.

          Apple could design products which were easier to build. But would you prefer a lesser product earlier or wait a few weeks for the best product?

        2. We prattle on with opinions around here, which is a great way to get different points of view about Apple. But as with the endless mounds of vomit from WallNut Street analcysts, we don’t know much about what actually goes on inside Apple. Nonetheless, I always enjoy our sharing here, contentious, ignorant or insightful.

      1. You are correct that Apple can create criticism for not ramping up enough prior to launch but ultimately long term success is getting the product right. Apple choose the latter rather than cut corners to push out product.
        Having bought many Apple products over the last 25 years, I have learned to be patient. Some products (like the Apple Watch) waiting for it to be launched or available take time but in reality it is not the end of the world that it take months to arrive. I’ll live.

  2. Apple will announce A-series MacBooks when their chips deliver better performance and features (Touch ID?) than Intel’s chips.

    There will be a lot of moaning from people looking backward at Intel compatibility (despite the fact that Apple will continue providing Intel options for a while), but Apple will keep improving their tech and a few years later even the detractors will forget they were detractors.

    Derek, I am calling you out! (with all good humor).

    Compared to 68xxx -> PowerPC and and PowerPC -> Intel, this will be a very smooth transition due to the deep and wide tool support that Apple has for its hardware and OS platforms now.

    1. I still think that for the foreseeable future Apple will develop iPads to be more Mac like but with iOS software so that the transition becomes somewhat stealthy by nature. The more it takes off the more they will push into Mac territory but without having to make Macs obviously appear end of line to the buyer with the prospective hit that will take on sales and confidence.

      1. The iOS vs Mac OS difference is not the same as the Intel vs. A-series difference.

        Apple is capable of matching each OS to whichever chip it wants too, although moving iOS to Intel would be most difficult (and very unlikely) due to deeper hardware/software integration.

    1. the wonderful thing about Apple designing and making it’s own components is that when Samsung and ilk get the plans they STILL can’t make them… “where to get THAT chip, THAT sensor ?… etc. ” They still can’t get a chip with ‘A’ series capability, they are trying to fake it by adding cores and look at the 2 years of screw ups with fingerprint tech on android before they sort of got it working.

      Apple funding smart people all around the world, besides California getting teams in Eastern USA, Israel, UK etc to do research s brilliant.

  3. I’ve been criticizing T.C on several issues but here I’ll like to praise him on his successes.

    T.C approaches things I believe from a ‘Operations Manager’ point of view.

    For example in marketing , I’ve complained often about Apple’s apple’s ad campaign like lack of Mac ads, BUT T.C is still selling MONSTROUS amount of stuff in spite of spending one dollar to 10 Samsung ad dollars. This is because T.C is using his own strengths which is building new outlets and forging relationships (he’s managed to navigate and open up the very difficult China market and satisfy all kinds of prickly politicians and trade partners. China is now Apple’s second largest market). This is also marketing at a high level.

    In Product Design he’s used his operational strength’s to build up Apple’s ability to vertically control it more, picking out key tech like sensors, processors etc.

    I still think he needs to focus on details like product launches and software but in his own way he’s doing a lot to ensure Apple winning for a long time.

    BTW I was just wondering, this building you own component stuff, i wonder how much input Ive had. he comes from a craftsmen background, his dad was a crafts teacher, and high end craftspeople build their own components if they can’t source it, for example a cabinet maker if he couldn’t find the proper metal handle or something would forge his own.

    1. I think the building your own component stuff is a win win, but carries a high degree of risk. We can see how difficult it is in the Android world, even Samsung won’t survive. There no way to effectively differentiate your goods and to parse the market into a segment you can dominate.

      Having more and more specialized / sophisticated and Apple only capabilities allows Apple to segment the market and dominate it’s segment. But it’s risky in the sense that if your vertical parts aren’t better and measurable ahead of your competition your collapse will be stunning and quick.

    1. Bob Mansfield is a legend. Filling his shoes is as difficult as filling Steve Jobs’ shoes. In that light, it wouldn’t be fair comparing Srouji to Mansfield

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