Originally published by Zach Jennings on LinkedIn, September 4, 2026. Expanded here with source references.
Apple just made a hardware engineer CEO, fifteen years too late.
John Ternus took over on September 1. Joined in 2001 on the product design team, ran Hardware Engineering, shipped the iPad and AirPods. Tim Cook moves up to Executive Chairman having taken this company to nearly four trillion dollars, which is a staggering thing to have done and I won’t pretend otherwise.
But be honest about what he built.
Cook didn’t run a hardware company. He ran a subscription business with a phone attached, and he ran it beautifully. What he did not do, not once in fourteen years, is invent something.
Here’s the case. It’s all in the filings.
Start where the defenders start
Somebody always points at the R&D line, so let’s go there first.
Fiscal 2011 was Steve Jobs’s last full year: $108.2 billion of revenue, $2.4 billion of R&D. About 2.2% of sales.
Fiscal 2025: $416.2 billion of revenue, $34.6 billion of R&D. 8.3% of sales.
Revenue grew 3.8x. R&D grew 14.2x. Apple nearly quadrupled its research intensity.
Nobody got lazy. They spent the money. That’s what makes this worse.
What fourteen years actually produced
One new hardware franchise. Apple Watch in 2015, AirPods in 2016. That’s the list. That’s the entire list.
Everything else on the income statement was already there when Jobs died. iPhone, 2007. iPad, 2010. Mac, 1984. Services was selling songs and apps before he got sick.
Open the annual report and count the product lines. There are five. Fourteen years, thirty-four billion a year at the end of it, and the table is the same shape it was when he was alive.
And the one thing they did build is going backwards. Wearables, Home and Accessories fell from $37.0 billion to $35.7 billion last year, off 3.6%. The only new hardware franchise of the Cook era is shrinking.
Vision Pro: eight years late, and it never got a line
Facebook shipped a consumer Oculus Rift in 2016. Apple shipped Vision Pro in February 2024. Eight years behind a company nobody accuses of being a hardware visionary.
And here’s the tell. Apple reports five product categories. iPhone. Mac. iPad. Wearables, Home and Accessories. Services.
Vision Pro isn’t one of them. Two and a half years in, the most hyped Apple launch since the iPad still has no line of its own. It’s buried inside the category that’s falling.
When Apple believes in something, it gives it a line. iPhone got one. Mac got one. iPad got one. The company is telling you in its own annual report exactly how big it expects that thing to get. Nobody had to leak anything.
The foldable is the same movie, again
Samsung shipped the Galaxy Fold in September 2019 at $1,980.
Apple’s foldable is expected this month. Seven years later. Projected at $1,800 to $2,500, which is to say roughly the same money Samsung was charging in 2019. Apple has never officially confirmed the thing exists.
Seven years to arrive second at the same price. That isn’t a company setting the pace. That’s a company waiting to see whether a category is safe, then charging a premium for turning up.
Then there’s Siri
At WWDC in June 2024 Apple demonstrated a personalised, genuinely intelligent Siri. They ran the ads. They sold iPhone 16s against it through the autumn.
In March 2025 they delayed it and pulled the ads.
In May they paid $250 million to settle a false advertising class action. Twenty-five dollars a device, up to ninety-five. No admission of wrongdoing, naturally.
And the fix, when it finally came? In January, Apple signed a reported billion dollars a year with Google to run Gemini underneath Siri.
Apple’s own words: Google’s technology provides the most capable foundation for Apple Foundation Models.
Sit with that. The company whose entire religion is vertical integration, that builds its own silicon and its own operating system and its own everything precisely so it never has to depend on anybody, rented the brain of its assistant from its largest search rival. Because it could not build one.
And the iPhone just kept billing
$209.6 billion in fiscal 2025, up 4.2%, half the company. A billion people on a replacement schedule, nudged along by a camera bump and a new colour. You don’t have to invent anything to collect it. You just have to not screw it up, and Cook was the finest operator alive at not screwing it up.
The trap Ternus walked into
Products: $307.0 billion of revenue on $194.1 billion of cost. A 36.8% gross margin.
Services: $109.2 billion of revenue on $26.8 billion of cost. 75.4%.
Services is 26% of what Apple sells and 42% of what Apple earns.
So if Ternus does the thing all of us are demanding, and builds hardware good enough to genuinely move units, he waters down his own margin. Every hardware dollar drags 37 cents of profit into a company that spent a decade teaching Wall Street to expect 75.
The hardware renaissance everybody wants is margin dilutive. That isn’t my opinion, it’s two lines in the same statement.
The question was never whether Ternus loves hardware. Obviously he does. It’s whether a board that just watched the blended margin hit a record 46.9% has the stomach for what loving hardware does to it.
Two numbers will tell you
R&D in fiscal 2025: $34.6 billion. Buybacks: $89.3 billion.
$2.58 handed to shareholders for every dollar spent working out what to build next.
Watch the next 10-K. If R&D climbs off 8.3% of revenue and the repurchase authorization doesn’t keep pace, Ternus got a real mandate.
If R&D sits at 8.3% and buybacks keep running near $90 billion, then the board hired a hardware engineer to preside over a capital return program, and the only thing that changed was the face on it.
That shows up in a filing about thirteen months from now. It always does.
Disclosure
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This article is for general informational purposes only and is not individualized investment advice or an offer or solicitation to buy or sell securities. Atlas Signal is not registered as a broker-dealer or investment adviser and is not a member of FINRA or SIPC. Figures cited are drawn from public SEC filings as of the publication date and may change without notice. Readers should independently verify material information and consult their own professional advisers.