Tim Cook Sat Out the AI Race — Will the New CEO Pay the Price?

Well, you're already thinking about it the way I think about it. I mean, look, I think if you're looking at it from 2026, it is hard to fault this guy. As you said, $3.6 trillion added to Apple's market cap. You know, he clearly fulfilled whatever task Steve Jobs set him out to do. His role was not necessarily to come out with breakthrough products. It was to iterate what Steve Jobs had already come up with on a global scale. You know, he squeezed every penny that was really available in the supply chain. He built up services. He put Apple into new areas like Apple TV and a host of things like that. You know, he's getting $20 billion of profit per year just out of the Google relationship, right? Just sort of using the user base in Apple's favor. So, I mean, all kinds of things. But what you're pointing to is where will we see this 10 years from now? And that to me is the most interesting question because, you know, Ben Thompson of Stratechery has put this with a nice metaphor. He sort of laid time bombs for the next CEO, which is to say the China risk could really blow up, and we can go into more detail there. And he's not invested really much at all into data centers for AI. That might be the right move, but if it turns out to be the wrong move, Apple would be years behind the companies that people have been fawning over the last few years with appropriate acclaim.

Patrick's right. We can make a call today on how he's done over the past 15 years and say clearly he'll be remembered today as the most successful successor to an accomplished founder. I mean, what Tim Cook did is rare, whether you're talking about the world of business or sports or even politics. If you have somebody who's kind of a figurehead in the same way Steve Jobs was, seldom do you have somebody come along behind them and continue or sustain that success. I mean, you know, if you're a college football fan, nobody followed Bear Bryant for decades until Nick Saban came along, right? Like, you skip generations. And Tim Cook, he wasn't a miss despite what people thought out of the gate. But there's another question about Tim, and that's based on the lack of new products, right? I mean, Apple is still really living off the iPhone and off the products that it's stitched onto the iPhone that have made the iPhone stickier than even it was when it was first released. And the question will be whether or not it runs out of momentum eventually and whether or not his successor can succeed in innovating again and delivering a new product that potentially adds to the company's prospects for the future. I mean, when we look at what he did well, it's easiest to just start with the numbers, where he took a $350 billion company and turned it into a $4 trillion company. He increased revenue 300%. He increased profits 350%.

There are two signature things that I think he did that really changed the trajectory for Apple. And the first was striking a China Mobile deal two years after taking over as CEO of the company. He'd spent a long time working on that. It changed Apple's trajectory in China. It unlocked the iPhone in China and turned China not just from a market that made and produced the iPhone, but it turned Apple into a company that really captured sales from the rising middle class in China. And that's really become a bedrock of their business. And also, to Patrick's point earlier, it's a precarious part of their business as well because of the geopolitical circumstances and the adversarial relationship today between the US and China. And then the second thing he did was he looked at the iPhone and he said, 'Okay, well, how do we make more money off a product that now is in the pockets of a billion people around the world?' And he leaned into services in 2019 and made that a focus of the company's business. He launched new services that drew attention to that, including like TV Plus and, you know, a credit card. He elbowed Apple into new areas so that it can make more money, just because of the sheer heft and the number of people who own the iPhone.

Yeah, no, the getting-wrong stuff is obviously more interesting. And I suppose maybe I'd point to two things. One, there's just like the clear failure. So, you know, they worked on an Apple car for 10 years and then abandoned the project. I honestly hem and haw about whether or not one should point that out as a major disaster. Tim Cook's line about it was that we like to fail internally. And honestly, I can respect that. They put a lot of engineering talent into it and at the end of the day decided not to do it. I don't know that we should hold his feet to the fire for that, you know, but it's worth thinking about. The other one is the Vision Pro. I mean, I did the Vision Pro demo and was in awe of this thing. Somehow convinced my spouse to let me spend $3,500 on the device, and after six days took it back. I was writing my book at the time. I thought, 'This is going to be the first book ever written in the Vision Pro.' And within six days, I realized this thing's useless. You can't have it on your head for more than 45 minutes. It's an engineering marvel, but it's basically a disaster as a product. And, you know, no pun intended, it lacks vision. I mean, that's Tim Cook. The engineering talent in the company can build a great product, but it doesn't have an ecosystem. I don't think Tim Cook's much of a partnerships guy. He's not really a win-win partnerships guy. He's an Apple-takes-all guy. And I think that really sort of came home when they tried to build this new platform in Vision OS. Companies like YouTube and Netflix had no interest in building for it. So, you know, that's a failure. But the bigger one is, I think, the failures are more intangible. Tripp will know as well as me: if you go find people that worked at Apple for 20 or 30 years, people who really understood the difference between the Steve Jobs era and the Tim Cook era, you know, there's just a lack of inspiration. There's just a lack of hunger. The people leading Apple are all worth hundreds of millions of dollars through their stock options. They just don't have the appetite to take on major projects like they used to. And you'll have someone that comes out of Caltech with brilliant expertise, and what are they doing? They're doing the iPad magnets for two and a half years before calling it quits or something, right? It's just a huge company, and I don't know, fundamentally, just the honest statement: I don't know if it's just the nature of a company that size or if it's Tim Cook's pedigree and risk aversion that just sort of makes the company a little bit dull, predictable, and more like a utility than it ever has been.

Yeah. I mean, I'd just elaborate on that.

If you don't mind. I mean, one of the things Patrick's getting at here, too, is that what Tim did over time was turn Apple into a juggernaut, a giant machine, right? Where operations had a bigger voice in product development. And some of that was necessity, right? They're making 200 million iPhones a year. You have to make sure that you hit certain deadlines to be able to deliver those iPhones. But the kind of rigidness of those deadlines closed some of the creativity possibilities for people who had once developed these products in a more nimble fashion. And that's locked them into the product lineup they have. And to Patrick's point, made it hard to be as innovative as they once were. And to people from the outside looking in, it's led to accusations that Apple's, like, more uninspired.

So, I think it's pretty nuanced because on the one hand, Apple would like to say, hey, we can just be the hardware engineering company. Someone's going to build out massive data centers. You know, if it's OpenAI, if it's cloud, fine. But they're going to use the iPhone to access it. And meanwhile, we'll actually collect 15 to 30% of every subscription, you know, supporting that ecosystem. I mean, in that sense, it's brilliant. But the nuance there also is that Apple had the first-mover advantage with Siri. I mean, Siri is pre-Alexa. It's pre any of this by a decade, and they completely squandered the potential. So the question is just going to be what sort of revolution is AI? And if you listen to Demis Hassabis and Elon Musk and all these people, I mean, if they are almost like half right about how much potential there is here, that it's the biggest change to computing since the web, if not much larger than that, then it's a strange place to be for, like, the world's most iconic company that has this creative, you know, five-decade history behind it to basically not be involved and just be a sort of passive vehicle for other people's AI systems. On the other hand, it's possible that, you know, they do just sort of ride this out, let every other company spend, and just take the sort of Google partnership where they are literally being paid to be the vehicle. And, you know, nobody really asks these days why doesn't Apple have their own Google competitor. It's kind of a nonsensical question, and possibly AI is like that. And so I sort of hate to say time will tell, we just don't know, but I think that's the most honest answer.

Yeah, certainly. I mean, they took their eye off the ball on Siri, and that was never a part of the business, a product that they prioritized, and therefore they weren't really in a position to step into the AI race in a competitive fashion because it just wasn't a muscle that they'd built up over time. And as a result, you know, they wound up in this position of getting scared internally about what AI, the threat AI posed to them, the fact that this could be the technological revolution that creates a new operating system that breaks up the kind of connective tissue between iOS and the iPhone. That kind of software-hardware experience that we're all accustomed to, that's part of the iPhone's magic. They were scared by that, and so they threw out their best shot at developing AI, and it just backfired. I mean, they've kind of backed into this position of, you know, waiting and seeing what will happen, in part because they missed out of the gate with what they developed. And as Patrick said, that leaves them in this position of having to wait to see how it will play out rather than actually dictating on their terms what happens to their business in this AI race.