Apple has named John Ternus, its head of hardware engineering, as its next chief executive. At the same moment, the company is paying Google roughly a billion dollars a year to run the AI brain of Siri, because Apple's own artificial intelligence has not been good enough.
Apple's hardware remains excellent. Its AI is not. And AI is where the next decade of computing will be decided. These two facts sit side by side, and they echo a pattern from Steve Jobs's wilderness years after he was pushed out of Apple in 1985.
The NeXT Lesson: Customers Were Right, Jobs Was Wrong
Jobs founded NeXT and ran it for twelve years. The ending is well known: Apple bought NeXT for its software, Jobs returned, and the iPhone followed. What gets overlooked are the eight years in the middle, when Jobs almost lost everything because he could not hear what his own customers were telling him.
By the early 1990s, NeXT was burning through cash. The computers were beautiful and too expensive. The machine Jobs had poured five years into—a black magnesium cube with a fragile paint job and a finicky optical disc drive—was not selling. What was moving was the software. The operating system called NeXTSTEP was five to seven years ahead of anything else on the market. Developers and customers loved it, and a handful of firms were building their businesses on top of it.
One of those firms was O'Connor & Associates, a Chicago high-speed trading shop. NeXTSTEP let them write proprietary trading software fast, giving them an edge on Wall Street. One day a principal from O'Connor showed up unannounced at NeXT's offices in Redwood City, California, and asked to see Phil Wilson, NeXT's human resources chief.
“Phil, you have to help me make Steve understand the value of NeXT computers to us is not in the hardware, it's in the software.”
O'Connor had done the math. Without NeXTSTEP, they would lose their trading advantage, and without the NeXT computer, they would lose NeXTSTEP. They were so dependent on the software that at the end of every quarter they called NeXT and ordered the most expensive workstations on the price list, overspecced, overpriced, whatever it took. As Mike Slade, NeXT's marketing VP at the time, told the author, “O'Connor basically made payroll.” The firm was propping up the hardware business just to keep the software alive.
Phil Wilson went back to his office and wrote Jobs a long email laying it all out. NeXT should abandon hardware. Become a software company. The customers were telling them where the value was. Jobs wrote back, “You're an HR guy.” Then a subtle threat: if NeXT became a software company, it would have to downsize, “and we won't need a guy like you.”
It took Jobs two more years, two more rounds of layoffs, and a near-bankruptcy to figure out what he needed to hear. On a day employees called “Black Tuesday” in February 1993, Jobs finally shut down the hardware division, laid off most of his employees, and sold what was left to Canon. Three years later, he told Terry Gross on Fresh Air that the door to start a new hardware company had closed before NeXT ever opened. He just had not seen it at the time.
What This Means for Apple in 2026
The mistake at NeXT was not betting on hardware-plus-software. That vision is literally what saved Apple after Jobs returned in 1997 and was later appointed CEO. The iPhone is the purest expression of it: hardware and software bound together, designed as one object, by a company that owns both stacks.
The mistake was insisting on selling that vision on Jobs's terms, in Jobs's form factor, at Jobs's prices, while customers were telling him what they actually needed was the piece they could afford and use. He wanted to show them his vision for the future, but they wanted a tool that solved their problems right now. It took him most of a decade to see that those were different things.
Now look at Apple in 2026. The hardware is still the best in the business. The integration—device to chip to OS—is the thing no competitor can match. That part of the original vision is intact. What is failing, what has been failing for two years now, is the AI. Apple Intelligence landed with a thud, and the promised personalized Siri got delayed. The company finally cut a check to Google for a custom Gemini model to paper over the gap.
And, in that moment, the board named a hardware engineer to run the company and promoted another hardware engineer, Johny Srouji, to oversee all the devices.
There is a version of the future where this is the right call. Apple's silicon team is extraordinary. On-device AI may turn out to be where the next ten years are actually decided, and no one is better positioned for that than the company Ternus is about to lead. Maybe the Google deal is a bridge—the way Google Maps was on the first iPhone—and Apple is two years away from running the same integrated play on AI that it ran on chips. That is the bull case. I do not dismiss it.
But the story I keep coming back to is NeXT. A company doubles down on the thing it knows how to do, while its customers try to tell it something has shifted. The founder, or the board, does not hear it. The problem is that it would require giving up a version of the company they have spent years building. For Ternus, the question is whether he can hear what the market is saying before the market forces him to listen.
