Can Apple Find Its Mojo?
Pausing to reflect on the world's greatest product company.
POD 134: Brittle Apple
This week, we focus on the state of Apple, from its pivot to services to its fumbles in AI to its geopolitical risk to its surprising turn as the heel to developers. Plus: we learn that Alex is no David Zaslav because he doesn’t see the genius in a CNN weather app, an appraisal of Airbnb’s “everything” app, and a celebration of the kookiness of Eurovision. Out Friday AM. Listen.
PVA CONVERSATION
Troy: A company episode! Apple feels like a good place to start.
There’s fodder to fuel a bull and bear case right now and the twilight-of-an-empire meta-narrative… the world’s most successful company, seen by many as lacking vision and grit, staring done the biggest shift in computing and interface since the mobile. Since ever.
Critics fear Apple’s gone soft. Famed Danish programmer and Basecamp creator David Heinemeier Hansson recently said the company needs “a new asshole” in charge. Daring Fireball author and preeminent Apple prognosticator John Gruber seems to agree. Contrasting Steve Jobs’s furious reaction to the failed MobileMe launch — “Can anyone tell me what MobileMe is supposed to do?... So why the fuck doesn’t it do that?” — with Siri product director Brian Walker’s recent consoling message to his team after the much-criticized AI rollout: “You should be proud… you gave it everything you had.”
Long-time design lead Jony Ive, a Job’s stand in with a more gentle demeanor, usually doesn’t have much to say about his former employer. Recent criticisms are more circumspect but notable nonetheless. Last week, in an interview at the Stripe conference, Ive insinuated that Apple has not articulated a vision for how technology should enhance our collective human experience. Ive said he was “extremely concerned about social media” early on, and lamented that there was “no discussion whatsoever” about its negative effects during its rise. The “lack of a coherent point of view” on social design means Apple hasn’t explicitly said “this is how we think people should interact with technology and with each other.”
Patrick McGee’s well-timed new book, Apple in China, adds a geopolitical lens. In his telling, Apple didn’t just play the outsourcing game everyone else played—it led it. Over 30 years, the company invested some $250 billion in China (a sum McGee compares to the Marshall Plan), accelerating the rise of China’s advanced tech economy. Since 2008, Apple has trained some 28 million workers and seeded the indigenous innovation that now powers rivals like Huawei and BYD.
This is a generational business story… one man’s exacting taste meets another’s operational genius, the business scales to become the world's most valuable company. Today, that empire stands at a crossroads. Apple’s signature strength: its ability to fuse form and function across hardware and software, is being tested as AI reshapes how we interact with technology. The window for new ideas and form factors is wide open. Over the long term, no amount of supply chain savvy can replace it’s regenerative product-flywheel, which has long endeared millions to the brand.
Technology shifts neatly packaged as human-centered products defined eras at Apple. I fell in love with Apple as it democratized desktop publishing . The original Mac wasn’t just a computer—it was the first real tool for creative humans. Ironically, that breakthrough was catalyzed by Canon’s Japanese laser printer technology. The Mac made WYSIWYG real. We marveled at what we saw onscreen as it emerged silently from our new laser printers.
The internet ushered in the second big wave. Jobs famously introduced the iPhone as three devices in one: “a widescreen iPod with touch controls, a revolutionary mobile phone, and a breakthrough internet communications device.” In 2024, the iPhone still accounts for 52% of Apple’s $391 billion in annual revenue.
The third wave has been Services — a ruthlessly effective effort to extract value from Apple’s prosperous user base and the app developers who serve them. With nearly $100 billion in revenue, Services is now Apple’s second-largest segment, buoyed by high-margin businesses like iCloud, AppleCare, and notably the $20 billion Google pays annually to be the default search engine in Safari.
AI will undoubtedly define the next wave. And that’s where the bear case sharpens. Apple has underinvested relative to its peers. Siri is a dog. Vision Pro, a moonshot product, is intriguing but nowhere near transformative… yet. iPhone sales are softening. The dominant skeuomorphic, app-centric UI model feels increasingly quaint in a world where AI wants to be the interface, not the app.
Hardware will change to meet the demands of new interaction models. And services will become even more central, as our devices serve not just as endpoints, but as nodes of real-time intelligence and transactional activity.
As a lifelong Apple person, I’ve watched the company stumble recently with a mix of sadness and schadenfreude—like seeing a well-heeled Tribeca banker family lose their Hamptons place after a coke hobby turned into a bad habit. The slick corporate presentations feel sterile, detached. Taste and determination replaced by a style guide.
I’ve threatened to ditch the iPhone more than once. Every time I do, my son calls bullshit. We are life-long deep in Apple. In defiance, I bought a Pixel phone, only to hand it off to my daughter’s boyfriend in frustration a week later. Apple’s vast gravitational field is a powerful moat.
Apple needs cultural and product reinvention to sustain new consumer expectations in the AI era. As Alex points out in the episode, the next wave will demand new thinking around how partners co-exist inside their platform and restrictive privacy policies.
It has a window. It has cash. Supply chain complexity from tariffs will be a short-term headache. The App Store’s 30% rake will continue to face legal and regulatory pressure. The Google money is a toll many will keep paying to gain privileged access to the world’s richest consumers. Worst case, losing that easy money may well force Apple to innovate around AI and the browser. Or just buy Perplexity.
All of these are manageable. Losing hard-earned product preeminence around evolving AI-driven consumer expectations is not.
The real risk is more existential: the absence of leadership with the confidence of vision and the pig-headedness of a founder. That’s a tough shift to navigate — especially at Apple’s scale, at the peak of its success, and on the cusp of the most significant computing inflection point of our lifetimes.
Looking forward to discussing this with you guys. Can’t wait to hear your takes.
BRIAN: I was surprised how down Alex was on Apple during the podcast. I mean, he bought the Vision Pro, so he’s pretty committed.
The pivot to services is noteworthy. Much of it is extractive in nature. Apple is a chokepoint in many markets and uses those commanding heights to levy taxes. This is highly lucrative and at far higher margins than software. Kudos.
Yet it’s also a form of rentier capitalism. This has more in common with being a landlord than an inventor (pre-patent protection). The regulatory scrutiny of these taxes is fair. I suspect it is also a reason Apple has uncharacteristically fumbled many key product areas, like the rushed Vision Pro and the disastrous Apple Intelligence, which gives me a lot of comfort that we aren’t getting replaced anytime soon, at least by this kind of AI.
I know Alex is channeling a sweaty Steve Ballmer in his analysis: Developers, developers, developers.
ANONYMOUS BANKER
“Fixing” Apple with M&A
Apple appears on plenty of banker buyer lists, yet its appetite for anything bigger than a tuck-in is weak. More than once, it has joined a sale process only to hire away the engineers (recent example).
With unrivaled consumer touchpoints (and no App Store toll on itself), Apple should hunt in three areas: AI, media, and health.
AI
On LLMs, Apple’s smartest AI move is neutrality: let the foundation-model providers bid for default status. OpenAI will happily match or beat the ~$20 billion Google spends yearly on search placement. Instead of massive M&A here, it should invest in capex for custom silicon and ultra-fast connectivity to run models on-device and fuel XR ambitions.
Below the model layer, Perplexity is a solid acquisition target. It looks like Apple News for AI search, and it would be a tidy tuck-in that broadens Apple’s content surface. Granola is another good target. Granola is all the rage in Silicon Valley because it listens to calls and takes notes frictionlessly (the legality is TBD). What’s most likely is small capability buys and outsized comp packages for top AI researchers.
Media
Advertising inside Apple News is now working, giving Apple an angle to dive deeper into content. The next logical move is to bolt that machinery onto a creator platform with real gravity; Substack is the cleanest fit. Here’s why:
Distribution at Scale – Substack’s best writers reach millions, but discovery still relies on crowded inboxes and word of mouth. Dropping posts into the Apple News feed would surface their work to one billion-plus devices and relieve inbox fatigue.
Community Features – Substack’s comments, chat, and “notes” keep readers on the platform longer. Apple gains a social layer it lacks, while Substack benefits from Apple-grade moderation tools.
Podcast Share Grab – Apple Podcasts already supports paid shows. A Substack buy would bring thousands of creator podcasts over, letting Apple bundle text + audio and counter YouTube’s 33% and Spotify’s 26% listening share. Apple sits at 14% (source).
Creator Economics – Substack takes 10% plus Stripe fees; Apple could match that cut (or waive it for a term) and juice adoption with advances, as it did for TV+. A better rev-split plus massive reach is a tough combo for writers to ignore.
If executed well, acquiring Substack would transform Apple from a passive storefront into an active participant in the scrolling economy, with Apple owning the pipes, the ads, a community, and more of the content itself.
Health
Health may be Apple’s clearest lane. The Watch already has ~30 million active U.S. users. As sensors, batteries, and form-factor improve, that base only grows.
Two paths stand out:
Longevity. The field is heating up: Function Health is reportedly raising ~$200 million at a ~$2 billion valuation for its testing platform, which now spans blood panels and full-body MRIs. Optimizing for longevity requires pairing real-time metrics (sleep tracking, HRV, resting heart rate, etc.) with additional medical testing like blood and body scans. By tapping its sensor stream from the Apple Watch for real-time data and combining an extensive suite of medical tests, Apple could launch a subscription health layer that delivers more actionable insights.
Chronic-disease management. Constant monitoring improves patient outcomes and reduces care costs. Disrupting this space could drive massive rewards. A solid target is Dexcom (enterprise value ~$33 billion). This company has the best CGM (continuous glucose monitoring) device on the market, and it’s used by diabetics to better manage insulin levels. With ~38 million Americans already living with diabetes, it’s a big market.
Apple Health already integrates medical records better than most EHR vendors. With targeted buys like these, Apple could own the consumer front end of healthcare.
Bottom Line: Apple doesn’t need flashy megadeals. A handful of precise acquisitions in AI, creator platforms, and connected-health hardware would close strategic gaps and keep Cupertino competitive in the next era of computing. These deals would still provide healthy M&A fees and help bankers sustain bad habits, so they don’t need to sell their Hamptons house.
Links from our chat
Sweden’s Eurovision frontrunner is KAJ’s “Bara Bada Bastu,” a joyous sauna anthem that’s now bookmakers’ pick to win—and a nod to Alex’s Nordic roots. LINK
Trump-world hints at a federal probe of Politico-owner Axel Springer after a Business Insider piece on Don Jr., signalling a bare-knuckle media grudge match. LINK
Unusual Whales tweet notes Trump told Tim Cook he “doesn’t want iPhone plants in India,” roiling Apple-policy chatter. LINK
A New York Times op-ed reads WeightWatchers’ bankruptcy less as the death of diets than proof that old-school calorie counting flopped—even as its core insight, social accountability, may still outlive the brand. LINK
FT’s Patrick McGee reminds followers that Apple still spends ~22% of revenue on hardware production—underscoring its supply-chain exposure. LINK
The Onion: “Gavin Newsom sits down for podcast with serial killer who targets the homeless,” skewering the governor’s media hustle. LINK
Google DeepMind unveils “AlphaEvolve,” an AI that evolves its own code, already saving the company millions in compute and even beating Strassen’s matrix-math record. LINK
NY Post excerpt from Patrick McGee’s new book argues Apple’s $275 bn China bet was a Faustian bargain—now driving an uneasy supply-chain pivot to India. LINK
WSJ profiles AMC’s Stubs A-List—nearly 1 million members seeing up to four films a week—calling it “the movie subscription cult.” LINK
Chegg, once a $12 bn ed-tech darling, executes its third big lay-off in 11 months as AI and Google’s search overviews bite into traffic. LINK
Tara Palmeri interviews YouTuber Johnny Harris on building a direct-to-audience media empire and why he’s betting on NewPress, not Hollywood. LINK
WSJ says looming tariffs could force Apple to hike iPhone-17 prices despite Cook’s supply-chain shifts to India and Vietnam. LINK
Decoder podcast: Nilay Patel and John Gruber debate whether Apple’s App Store power has outgrown its original mandate. LINK
YouTube explainer digs into Bill Belichick’s UNC move and his 24-year-old partner—pure college-football gossip catnip. LINK
Plain English pod asks if pop culture is “worse than ever” as IP recycling and catalogue buy-outs crowd out originality. LINK
FT interview: Sam Altman calls GPT-5-level models “genius-grade intelligence” and urges patience on open-sourcing amid election-year scrutiny. LINK
That was the bankers idea. Take it up with him.
LOL. Substack? Guys. C'mon. It would be a rounding error on a rounding error. Also: Apple does not have a supply problem for News, Podcasts are not a real business for them, and the last thing they need is the UGC content moderation problem that social would bring them.