Apple's Recent Leadership Changes Suggest Transition From iPhone Reliance to Focus on Services

A new report out today by The Wall Street Journal takes a look at the recent shake ups to Apple leadership, and how the changes could be an indicator that the company is transitioning from relying on iPhone sales to prioritizing its services business and other divisions.

The primary reasons for the shifts vary by division. But collectively, they reflect Apple’s efforts to transition from an iPhone-driven company into one where growth flows from services and potentially transformative technologies.

These changes include the promotion of John Giannandrea to senior vice president, from a machine learning and AI role. After his promotion, Giannandrea decided to move Bill Stasior, head of ‌Siri‌, to a lower role at the company. In terms of high-profile departures, retail chief Angela Ahrendts recently left Apple after spending five years with the company. These three major changes happened within the past two-and-a-half months.

Along with the staffing updates, Apple has trimmed around 200 employees from its autonomous vehicle project, and continues to redirect much of its engineering resources into its streaming TV service ahead of the planned 2019 launch.

“This is a sign the company is trying to get the formula right for the next decade,” said Gene Munster, a longtime Apple analyst and managing partner at venture-capital firm Loup Ventures. “Technology is evolving, and they need to continue to tweak their structure to be sure they’re on the right curve.”

Now, Apple is focusing on building its services catalog and enhancing artificial intelligence features, which should in turn encourage more hardware sales. Replacing Stasior as the head of ‌Siri‌, Giannandrea is said to be "looking to improve ‌Siri‌'s accuracy and performance."

iPhone sales dipped over the 2018 holiday season, leading to many reports about Apple's new plans to combat stagnating smartphone sales. The company is said to have cut back on new hires, and in January Apple lowered its revenue guidance for the first quarter of the 2019 fiscal year by up to $9 billion due to fewer iPhone upgrades than it anticipated.

At the same time, Apple's services business hit an all-time high in Q1 2019, up 19 percent year-on-year. During the first fiscal quarter of 2019, Apple's services business brought in $10.9 billion in revenue, including platforms like iTunes, the App Store, the Mac App Store, Apple Music, Apple Pay, and AppleCare. Thanks to their success in the wake of flagging iPhone sales, these services are expected to be a growing focus for the company over the next few years.