Apple's Retail Chief, the Former Burberry CEO, Is Leaving — and So Is the Fashion Plan

Six senior vice presidents have left since Cook took over.

Angela Ahrendts, the senior vice president who has run Apple's retail business for the past five years, is leaving. She was one of Apple's highest-paid employees: a regulatory filing Apple submitted on January 8, 2019 put her 2018 compensation at $26.5 million. By comparison, CEO Tim Cook made only $15.7 million that year (excluding stock).

Ahrendts joined Apple in 2014 from Burberry, the British luxury house, where she had been CEO. Apple paying a large salary to hire someone from fashion who "didn't understand tech" to run a business this important was read at the time as a major change of direction for the company.

Over the following years she reworked the stores in a series of ways: pre-job training for store staff, a system for booking an appointment online before coming in, a new Concierge reception system to break up the queues, a standard uniform for employees, more relaxed service areas, potted plants in the flagship stores.

But none of that was Cook's most immediate reason for hiring her. The reason was to turn the Apple Watch into a luxury good. The first Apple Watch, launched alongside the iPhone 6 in September 2014, wore the label plainly: depending on case size and band, the Sport and standard models ran from $349 to $1,099, while the Apple Watch Edition started at $10,000 and reached 126,800 yuan at the top.

In her first months at Apple, Ahrendts handled Apple Watch sales through jewelry channels. She put the watch in fashion magazines, signed supermodels to promote it, and struck a partnership with Galeries Lafayette — all to push it into the luxury world.

But not long after the launch event, Reuters published survey data showing that 69% of Americans had no interest in buying an Apple Watch, even with a firm sale date already on the calendar. Figures released by Slice Intelligence that August put daily sales below 20,000 units, sometimes below 10,000. Two-thirds of what sold was the low-margin Sport model. The gold Edition — priced above $10,000, Apple's bet on the luxury market — drew almost no one: total US sales to that point were under 2,000.

The Apple Watch Series 2, released in 2016, kept the Hermès collaboration and the top-of-the-line Edition, but it also strengthened the sports features. The new model had GPS built in, so it could record workout data without a phone, and was water resistant to 50 meters.

In its marketing, Apple partnered with Nike to launch a Nike+ version and stopped selling every first-generation model except the Sport. The tilt away from luxury and toward athletics was now plain.

With the Apple Watch Series 3 in 2017, Apple stopped bothering with an Edition model and delivered something plainer: cellular support. The watch could now place and take calls and send messages entirely without a phone, connect to AirPods without a phone, and track heart rate more capably. The slogan changed too, to "Stay active. Stay healthy. Stay connected."

At that year's event Apple also said the Apple Watch had a 97% customer satisfaction rate and was growing 50% a year, and that it had passed Rolex to become the world's largest "watchmaker."

By the fourth-generation Apple Watch in 2018, Apple's copy read: "the ultimate guardian of your health," "a good companion for fitness," "an assistant for everyday life." The luxury playbook had been dropped entirely.

A tech company still finds it hard to get into the luxury world — even one as strong as Apple, and an executive as good as Ahrendts. With the Apple Watch off the luxury track, Apple no longer had much reason to keep an executive paid more than its own CEO.

Apple has just come through a year of sharply falling iPhone sales, but that is not the real reason the head of retail is leaving. The decline had several causes — Apple's pricing, the pace of its marketing, demand in China and in other markets — and no one person could have reversed them. In a regulatory filing, Apple also said that falling phone sales could create difficulties for the stores, but that with Ahrendts' support sales had already improved markedly.

Where Ahrendts goes next is not known. She will be replaced at Apple by Deirdre O'Brien, who has worked at the company for 30 years.

Five years in the chair of Apple's senior vice president for retail already counts as a long run. The person in it before Ahrendts was John Browett, former CEO of the e-commerce site Dixons. Six months in, he had caused a string of problems, including layoffs at Apple's stores, and furious store staff forced him to apologize publicly. Cook then fired him.

Browett's quick arrival and exit made people wonder whether Apple's retail business had been badly weakened by Ron Johnson's departure. Johnson, a veteran at Jobs' side, founded the Apple stores and coined the name Genius Bar. Browett had come to Apple specifically to replace him.

John Browett worked at Apple for 10 years. Over that decade, Apple Store retail locations rode the sales of several era-defining Apple products to become not only the most profitable stores in the world but, in the case of several distinctively designed ones, well-known city landmarks. Under his management, Apple Store reached the highest sales per square foot of any retailer in the world.

Six months after Jobs died, a wave of departures hit Apple. Andy Miller, vice president of the iAd advertising business; Dag Kittlaus, head of Siri; David Tupman, vice president of iPod and iPhone engineering — all of them left, and Ron Johnson with them. By his own account, he left because Apple Store had already reached a peak and he wanted a new challenge.

A year later his troublesome successor, John Browett, was gone too, but that day's coverage went to someone else: Scott Forstall, the founder of Apple's iOS business, whom Cook fired at the same time.

Forstall was a longtime Apple employee who had spent the previous seven years running product software development for the iPad and iPhone. The New York Times called him a pivotal executive, one who in many ways represented Jobs' technical thinking more fully than anyone else. Before Jobs died, Forstall was seen as a strong candidate to succeed him.

But Forstall was also known for his ambition and his appetite for conflict. While Jobs was alive he could largely keep his combative, self-regarding executives in check. After he died, those traits of Forstall's produced more and more friction inside Apple.

The trigger for Forstall's exit is widely believed to have been his refusal to take responsibility for the failure of Apple Maps. After iPhone users complained about the many flaws in Apple's newly launched mobile mapping service, Forstall would not sign a public apology letter about it; he thought the problems were being exaggerated. In the end, Cook signed it in his place.

A month later, Cook fired him. Dismissing one of Jobs' most trusted lieutenants for a reason this faintly ridiculous put Apple's internal fighting out in the open. Outsiders had plenty of regrets about it, but Forstall had to go.

Another man who left as inexplicably as Forstall was John Theriault, Apple's senior vice president of global security.

Theriault joined Apple in 2007 and, until he left, ran the company's entire security operation. He had previously worked at the FBI. In 2008 he led a "counterfeit-busting" team to China to go after fake iPhones and iPod touches. In 2009 the tech blog Gizmodo wrote that Apple had an internal World Wide Loyalty Team, charged with stopping leaks of the company's product secrets — and that Theriault was one of the people in charge of it.

In 2010 came Apple's famous lost iPhone 4 prototype. An Apple employee left the prototype at a San Francisco bar called Cava 22, and Gizmodo got hold of it and published the story. A year later the scene repeated itself with striking fidelity: an Apple employee lost an iPhone 4S prototype at the same bar.

Plenty of people mocked Apple for staging the same play twice, but true or not, the blow to Theriault was real. Not long after Jobs died, he left over it.

Since Cook took over Apple, six senior vice presidents have gone. All of these stories are good ones, but none matches the exit of Bob Mansfield, senior vice president of technology.

Mansfield oversaw innovation in wireless technology and semiconductors and had led development on several of Apple's signature products, including the light MacBook Air laptop, the all-in-one iMac and the iPad. In June 2012 he announced his departure for the first time. On his reasons, the US tech outlet 9to5Mac, citing Apple insiders, reported that Mansfield had long wanted to move his focus to chips and future products and did not want to carry so much management work.

Two months later Apple announced that Mansfield would stay on after all, running Future Products and reporting directly to Cook. One of the products in that pipeline was the Apple Watch. Scott Forstall's departure in August 2012 is widely regarded as the key reason Mansfield stayed. There was also the matter of Dan Riccio, Mansfield's replacement, who was not up to the job and drew complaints from engineers. Cook had no choice but to bring Mansfield back, on terms worth about $2 million a month in salary and stock.

On July 28, 2013, Bob Mansfield's name disappeared from the company's leadership page again, and Apple then confirmed that he would no longer work as a member of management but would report to Cook as an adviser.

That was not the end of it. In 2016, according to The Wall Street Journal, Apple hired the already-retired Bob Mansfield a third time, putting him in charge of the company's car business.

Some analysts think that Mansfield's convoluted series of exits was really one of Cook's methods for keeping talent from leaving: better to let Mansfield hold a nominal post than allow any competitor to take away a man who had led Apple's hardware work for so long.

Cover image/visualhunt