Published October 29, 2012
SAN FRANCISCO – Apple Inc CEO Tim Cook on Monday replaced the heads of its software and retail units in the company's biggest executive shake-up in a decade following embarrassing problems with its new mapping program and unpopular store-related decisions.
Software chief Scott Forstall, who oversaw the launch of the flawed mapping software and much criticized Siri voice-enabled assistant, will leave Apple next year.
Forstall, seen as a polarizing figure inside Apple, had been billed as one of the future candidates to take the top job at Apple. He was the executive behind the panned Apple Maps app that the company announced with much fanfare in summer.
Apple said in a statement that retail chief John Browett "is leaving," without elaborating; that a search for his replacement is underway; and the retail team would report directly to Cook. Browett had riled up the retail store staff when he reduced the number of employees in his unit.
The departures come a little more than a year into Cook's tenure as chief executive. Cook replaced the late Apple founder Steve Jobs, considered one of the best executives of all times by many analysts and investors.
"These changes show that Tim Cook is stamping his authority on the business," Ben Wood, analyst with CCS Insight, said. "Perhaps disappointed with the Maps issues, Forstall became the scapegoat."
Apple upended the tech industry with the release of its iPhone smartphone in 2007. But the company is facing increasing competition from search giant Google, whose Android has become the world's most popular mobile software, as well as from Amazon.com Inc, Microsoft and Samsung.
"Competition is moving much faster to be more Apple-like," said Tim Bajarin, president of technology research and consulting firm Creative Strategies. "They're finding they need to streamline the management team in order to get things going faster."
Apple's launch of its own mapping service in September, when it began selling the iPhone 5 and rolled out its updated iOS 6 software, led to widespread user complaints, particularly since it replaced the popular Google Inc Maps.
Apple's Siri personal assistant software also came under a lot of criticism, including for not providing information on business location, when it was launched last year.
Both the services were introduced with much fanfare by Forstall, who had supervised their development as senior vice president of iOS software.
The executive changes hand over substantially more responsibility to Eddy Cue, the head of Internet Software and Services who helped create the iTunes music store and App Store. The 23-year Apple veteran already is in charge of Cloud services and will take on Apple Maps and Siri. Craig Federighi will oversee Apple's mobile iOS software as well as its OS X Mac software, Apple said.
Putting the mobile and personal computer software teams under the same manager could improve operations within the company, particularly as the capabilities and features of smartphones and PCs increasingly converge, said analysts.
"If you have two different heads, you have two different fiefdoms," said BGC Partners analyst Colin Gillis.
Another executive who will get extra responsibility under the shake-up is Jonathan Ive, Apple's head of industrial design, who has played a key role in Apple's success by imbuing its gadgets with a distinct look and feel.
That magic touch could help reinvigorate the look of Apple's software, which has been criticized by some technology observers, Gillis said.
Shares of Apple, the world's largest publicly traded company by market value, have declined 14 percent in the past month since reaching a 52-week high of $705.07 in September.
Browett, former CEO of British electronics retailer Dixons, took over as senior vice president of Apple's retail stores earlier this year, replacing Ron Johnson, who went on to become the CEO of JCPenney.
"I think ultimately they probably discovered that his experience with Dixons didn't translate that well to the Apple stores and he just probably wasn't the right fit," Bajarin of Creative Strategies said.
Apple, which described Monday's moves as a way to increase "collaboration" across its hardware, software and services business, said Forstall will serve as an advisor to Cook until his departure.
Last week Apple delivered a second straight quarter of disappointing financial results, and iPad sales fell short of Wall Street's targets, marring its record of consistently blowing past investors' expectations.
(Reporting by Alexei Oreskovic; Editing by Richard Chang)