Say Hello to the New CEO. Where Will John Ternus Lead Apple?

The black turtlenecks and blue jeans. The Zen Buddhist influence, the “fruitarianism,” the cars with no license plates. An idiosyncratic obsession with detail that, according to his wife, meant their home went eight years without a couch because he couldn’t agree on furnishings.

When Steve Jobs, the late trailblazing Apple CEO, stepped down in 2011, many analysts called him impossible to replace.

“There’s no way you’re going to be as dynamic a company without him,” one investment bank said of the man who fundamentally changed the way humans communicate with the iPhone. University of New Haven business professor George Haley told the Christian Science Monitor his “knowledge of what the market will crave is unique to Steve Jobs in our generation.”

The chorus of voices made it sound like Jobs would be a harder act to follow than Jack Welch, Walt Disney or Caesar Augustus.

And then Tim Cook happened. When he succeeded Jobs, Apple was worth $350 billion. Today, its $4.8 trillion market cap has it jostling with Nvidia for the title of most valuable company in the world.

On Wednesday, a new leader, John Ternus, will make his first public appearance as CEO when the company hosts its latest Apple Event, a production announcement that consumer tech geeks have come to treat like an evangelical happening and investors like a papal address.

The Handoff

To look into what Ternus may announce and say on Wednesday, you need to briefly look at where his predecessor left things.

During Cook’s 15-year tenure, Apple’s annual revenue roughly quadrupled to $416 billion. As chief operating officer, he had been the architect of the company’s supply chain, turning manufacturing and component procurement into an art that produced incredibly lucrative margins.

He walked into the enormous success of the iPhone, but used his COO background to make it a truly global phenomenon. Expanding to emerging markets like India and Brazil was a top priority, and a huge victory came in 2014 when the iPhone launched on China Mobile, the world’s largest mobile network.

Earlier this year, Apple said it reached the milestone of 2.5 billion active devices, up from 1 billion a decade ago. Get more devices in the hands of more people? Mission accomplished.

Cook also oversaw the introduction of the Apple Watch and AirPods, smaller but lucrative additions to its product line. More notably, under him, the company’s services division, home to Apple Music, Apple TV+, Apple Pay and iCloud, became a $110 billion annual business (the iPhone, by comparison, is a $210 billion business).

But, if there’s one thing Cook did that will be top of mind when Ternus speaks Wednesday, it was go all in on premiumization. Over the years, Apple gradually added more and more expensive Pro models to its phone and computer lineup, giving the loyalist fanbase Jobs cultivated and Cook expanded a reason to spend more.

Consequently, while Apple maintained its basic iPhones and MacBooks as entry point devices, the company managed to make the average device more valuable. That created a cushion to absorb cyclical downturns in consumer electronics, often caused by people waiting longer to upgrade or refresh their personal devices.

Starting at a Premium

When Ternus leads his first Apple Event this week, analysts expect the premiumization strategy will be front and center.

JPMorgan analysts predict the new fall iPhone lineup will not feature any base models for the first time ever. The bank believes it’s likely Wednesday will see the launch of the iPhone 18 Pro, Pro Max and the highly anticipated foldable iPhone Ultra. The regular iPhone 18, 18e and Air 2 will have to wait until spring 2027.

“We have a huge launch next week that’s going to be phenomenal,” Ternus wrote to Apple employees in a memo on September 1, his first day as chief executive.

JPMorgan added that Apple is right to enter the week with premium-infused swagger. The company’s Pro model iPhones, its analysts noted, accounted for 65% of shipments last year, up from 37% in 2020. Its high-end models aren’t the niche, they’re the dominant product.

If the event goes as the bank expects, it will signal to investors that Apple under Ternus is bullish on its long-term pricing strategy of migrating more buyers to Pro. While the new CEO is a longtime hardware executive who had a hand in developing the iPhone, iPad, Mac, Apple Watch and AirPods (his product credentials are as good as it gets), his business philosophy is less widely known and how he may leverage Apple’s pricing power is unclear.

As for what the new foldable iPhone will set you back in the meantime, analysts at IDC project the average unit could go for $2,550.

Morgan Stanley analysts, who wrote the foldable unit represents “the biggest iPhone form-factor change since iPhone X,” think the new Pro models won’t come cheap either, as they expect the “broadest, and most significant, like-for-like iPhone price hikes in company history.”

Morgan Stanley forecasts Apple will build 7 million to 8 million units of the foldable iPhone in the second half of 2026, rising to 20 million by the end of its first product cycle. That may require some rapid, Tim Cook-like supply chain wizardry, as Nikkei reported Friday that the company is currently limited to making only a few hundred units per day.

Once production does pick up, Morgan Stanley does not think units will sit in storage for long: Analysts project Apple could see $14 billion in revenue from the foldable iPhone during the quarter ending December 31.

Other analysts see the company becoming, overnight, a heavyweight in the foldable smartphone market. Counterpoint Research estimates Apple will capture a quarter of the market in 2026, trailing only Samsung’s projected 32% share. IDC projects it will have a 40% market share by 2027.

The Cost to Be the Boss

Ternus, of course, has a hurdle race’s worth of macroeconomic issues ahead of him, but that’s part of the job description when you run a company whose revenue is bigger than the GDP of either New Zealand, Finland or Portugal.

One issue that will immediately be dropped in his lap is the rising cost of memory, especially NAND and DRAM, which Morgan Stanley estimates could drive up the price of iPhone Pro models by more than $200 year over year. That’s an inflated price tag that doesn’t do anything for Apple’s margins, and the memory issue is expected to drag into 2027 and beyond due to demand from the AI sector.

The issue has already created doubt on Wall Street. Because of rising component costs and other supply chain concerns, investment bank Jefferies last month downgraded Apple’s stock to underperform, and cut its price target to $263.66, implying an 18% downside. The average price target according to analysts surveyed by Zacks Investment Research is $328.75, which implies the stock is a hold with no upside or downside.

For assuming the weight of these challenges, Ternus will be paid a lot more than you, of course.

Last year, Cook made $74.3 million in total compensation. Most of that, $57.5 million, was paid in Apple stock. The rest consisted of his $3 million salary and a $12 million performance bonus. He is now moving on to the executive chair role, where his base salary will drop to $2 million and he’ll be eligible for an equity award of $45 million next year.

Ternus, meanwhile, will make the same $3 million in CEO base pay as his predecessor. His 2027 stock award is set for $55 million, according to an SEC filing. A quarter of that will vest over four years, while the remaining three-fourths will be paid out based on how Apple performs relative to the S&P 500.

Cook had the same conditions attached to his compensation and, given the sterling results he turned in as CEO, he took them dead Siri-ous.