Can Eddy Cue break Apple’s slump?

Earlier this month, Bloomberg’s Mark Gurman reported that Apple had scaled back its plans to launch a new Health+ service and was revisiting its entire health and fitness strategy.

While this could be seen as being another sign of trouble at Apple, as the company is currently mired in an ongoing narrative about its inability to ship AI features it promised nearly two years ago, I choose to see this as the opposite: a promising early sign that Apple’s executives are recognizing that its headlong charge into chasing services revenue might be coming at too high a cost.

The unlikely hero in all this? Apple’s services chief himself, Eddy Cue.

This isn’t good enough

At the end of last year, with the departure of former Apple COO Jeff Williams, Cue took over Apple’s health division. Even though Cue has been at Apple for a very long time, he was new to this group, and it seems to have made a difference. A new leader comes in with no ego invested in the path the group has been walking down, which makes it easier to see things fresh and not be afraid to make changes.

What Cue saw was a team that was busily preparing a new service, Health+, that offered AI-powered coaching features using data from Apple Health. His response seems to have been that, even for the guy whose job it is to grow and maintain Apple’s services business, the service being built was not compelling enough to launch.

But I think it goes deeper than that: The App Store has several apps that mine Apple Health data to generate AI-enhanced health information. What might have felt like an add-on feature a few years ago feels more like table stakes for Apple’s own Health app these days. And, according to Gurman, Cue has asked that a bunch of the features being built for Health+ just be rolled into the Health app.

It’s not Sherlocking

Is it wrong for Apple to look at other apps in the app store, like Athlytic, and realize that its basic, fundamental device features are lacking? This is the classic “Sherlocking” argument, but I don’t agree with it. There is a base level of functionality that Apple should be providing with every device it sells.

Apple’s brand promise is that it sells nice stuff–a little pricier than the competition in a lot of cases, but you get better quality for what you pay for. That requires a level of basic functionality that comes along with the device that you’re buying. Right now, on the health and fitness side, Apple’s in danger of creating the perception that users need to buy an iPhone and Apple Watch and then subscribe to a service (from Apple or a third party) to make it worthwhile.

Cue’s decisions seem to reflect this worldview. Apple’s services, and indeed the services of third-party app developers, should exist to augment the base level experience. Independent app makers are always aware that Apple could roll in and stomp on their apps, and the wise ones realize that Apple’s much more concerned with satisfying a broad general audience, leaving room for apps and services that cater to more sophisticated or focused users. It has always been thus.

Right now, Apple Health doesn’t feel state-of-the-art. It feels like an empty shell, full of data but with no intelligence explaining what that data means. I realize that health information is tricky and highly regulated in most of the world, but it’s incumbent on Apple to make all the data it collects understandable and actionable–and it can’t hide that behind a monthly fee.

A nice hotel

Forgive me for this tangent, but I swear it’s going somewhere: a few weeks ago, I went on vacation. We stayed at a nice hotel rather than the less-nice-but-cheaper VRBO condo rental we usually do. Because I’m me, I started thinking about Apple. Like Apple, the nice hotel’s brand promise is that it’s a nice hotel. If the hotel didn’t clean its rooms well, didn’t provide soap that smelled nice, didn’t maintain the in-room refrigerator, didn’t clean the swimming pool, it would probably decrease its expenses and increase its profit margin. But over time, it would lose its niceness and become a lousy, overpriced hotel.

It’s a tricky balance, holding to the promise of your brand while also calibrating how to make a good profit. (I will point out that the hotel has an undoubtedly high-margin bar and restaurant and rents beach supplies at an enormous markup. These are the equivalent of Apple’s services.)

What I get out of Eddy Cue’s reported decisions is that he seems to understand that not everything can be a service. If you strip-mine Apple’s devices so that they’re just empty containers into which services can be placed, you lose the ability to sell iPhones for $1,200. Apple needs to keep its standards high, wherever possible, and then offer services that provide value that goes beyond the basics. I don’t expect Apple to give me “Severance” for free, but I don’t expect to pay a subscription fee to use my own Wi-Fi.

Opportunity for change

One final point: Apple is entering a major period of executive transition. A few people, like Williams, have already left. Tim Cook is probably not going to be around too much longer. A lot of high-level execs have been at Apple for decades, have made loads of money, and will not stick around too much longer.

This can seem like a terrifying brain drain. And if it hasn’t been handled right, yes, it’s an existential risk for Apple. But it’s important to consider that it’s also an enormous opportunity, because every time someone–even a longtime exec like Eddy Cue!–is given a new remit and new responsibilities, they are given the opportunity to change direction and revisit old decisions.

It’s an opportunity that happens regardless of the stature or track record of the people being replaced. Tim Cook, when he took over as CEO from Steve Jobs, made a bunch of immediate changes to corporate policy, including reinstating charity matches. Being the new boss means setting your own agenda. In fact, one might argue that to establish yourself as the new boss, you have to set your own agenda or risk being seen as a mere caretaker.

Every time an executive enters a new role at Apple, they have the opportunity to revisit decisions and policies, some of which could be years or even decades old. Not that they’ll change everything, but a new set of eyes and responsibilities can often be the perfect tonic for a troubled organization. Sometimes things are not working right, but nobody feels empowered to change them–because it’s the way they’ve always been done. A new leader can make those changes without feeling any of the burden of the past.

If Eddy Cue can come in and decide that something Apple’s been working on for years doesn’t meet the company’s standards, that even a potentially revenue-generating new service is a bad idea, imagine what might happen with new executives all over the company.

Apple has benefited greatly from an era of executive stability over the last decade or two. Now it potentially stands to benefit from ending that era and embracing change.