Apple Shake-Up Signals Tim Cook Era - Wall Street Journal

By JESSICA E. LESSIN

Apple CEO Tim Cook, shown above in San Jose, Calif., last week, ousted software and retail executives.

Now the Tim Cook era at Apple Inc. really begins.

In a shake-up weeks in the making, Apple's chief executive this week made a series of moves designed to restore peace to a management team roiled by the death last year of company co-founder Steve Jobs, whose outsize personality had kept managers in check.

Mr. Cook jettisoned Apple's most controversial executive, mobile software head Scott Forstall, who oversaw Apple's troubled maps unveiling, handing off his chief duties to a software executive viewed inside Apple as a more even-keeled manager. At the same time, Mr. Cook pushed out John Browett, who only six months ago took over Apple's widely-praised retail operations.

With his revamp, Mr. Cook is putting his own stamp on Apple and its executive team. Since taking over from Mr. Jobs last year, Mr. Cook has made a series of decisions that deviate from Mr. Jobs's management tack and style. He has backed efforts pushed by investors and employees such as a stock-buyback program and a charitable giving program that Mr. Jobs had previously opposed.

The latest changes bring some risks. It fails to address the question of who will fill Mr. Jobs's role as Apple's ultimate decider on products. Mr. Cook has said he spends less time on products than Mr. Jobs and has empowered individuals to run their groups. It also creates a new hole in product leadership. Mr. Forstall, for one, was seen by many as the Apple executive most knowledgeable about software at a company stacked with hardware pros.

The turmoil comes amid a sharp drop in the company's market value after a historic run-up earlier this year. Apple's shares last traded at $604 and are off nearly $100 in the six week. They reached a peak of $702.10 on Sept. 19.

The latest version of Apple's maps software had a number of bugs which were criticized world-wide for its errors. Mr. Cook released an apology for the snafus earlier this month. But Mr. Forstall refused to sign a public apology over Apple's mobile maps. It was a factor that shaped his exit, which has been in the works for weeks, said people familiar with the matter. Mr. Forstall's departure was finished over the weekend, according to a person familiar with the matter.

Mr. Forstall didn't return calls for comment and Mr. Browett couldn't be reached.

The changes raise the standing of several longtime employees, among them senior vice presidents Craig Federighi, hardware design chief Jonathan Ive, who will play a greater role in software design, and Internet software and services chief Eddy Cue. A person close to Apple said the company has a deep management and product-development bench and that the newly empowered executives will ensure a more collegial atmosphere.

Messrs. Ive and Forstall clashed so severely in recent years that they avoided being in the same room together, said people who worked with both men. "They didn't cooperate at any level," one of the people close to the matter said. "They always let Steve decide."

Mr. Browett's hiring under Mr. Cook raises questions about how well he was vetted. From the outset, the former Dixons Retail PLC executive failed to grasp the nuances of how the company culture worked and was unpleasant to work with, people close to the situation said. He tried to push the same cost-cutting playbook he used at Dixons, but the moves didn't sit well with Apple employees.

Among his missteps was a new employee scheduling system for Apple retail stores that was designed to save money but triggered a firestorm internally. The system cut back some employees' hours so severely that it ignited rumors of layoffs; the scheduling was ultimately reversed.

But the shake-up demonstrates Mr. Cook's resolve to tackle thorny personnel issues that Mr. Jobs let fester. Mr. Jobs long kept the strong personalities at Apple in check by always casting the winning vote or by having the last word. His departure forced those clashes into the open, said people familiar with the company, ultimately pushing Mr. Cook to act.

Still, people inside and outside Apple said Mr. Cook is trying to steady the ship. They have expressed relief that the Cupertino, Calif., company is run more smoothly than under Mr. Jobs, when employees lived in constant fear of falling victim to a Jobs' tirade or a whim.

Earlier this year, Mr. Cook coaxed Apple hardware chief Bob Mansfield out of retirement after his staff complained about working under his replacement, according to people familiar with Apple's hardware group.

Even before Mr. Forstall refused to sign the apology over the maps, he was on thin ice at Apple, said people familiar with the matter, despite fierce loyalty from some members of his team. He was widely seen as unwilling to cooperate with other Apple executives and political about his ambitions to play a greater role at the company.

At the same time, Mr. Forstall ran the iOS mobile software team like clockwork and was widely respected for his ability to perform under pressure. And despite the stumble with mobile maps, the iOS software, which powers iPhones and iPads, remains the one that rivals like Googleare scrambling to match.

Mr. Forstall "was the one who understood everyone else in [Silicon] Valley," said Andy Miller, a former Apple executive who is now president of motion-control sensor company Leap Motion.

After Mr. Jobs's death, Mr. Forstall lost his biggest fan at the company and became frustrated, according to people who spoke to him about it. Mr. Forstall recently told people that there is no "decider" with Mr. Jobs gone, according to a person briefed on the conversation.

Mr. Browett, a British executive, was hired to run Apple's retail stores after a months-long search that considered a large number of candidates. Mr. Cook, who interviewed Mr. Browett personally, disclosed the appointment in January. Mr. Browett didn't start until April.

Mr. Browett had run struggling U.K. electronics retailer Dixons Retail and had international experience that fit with Apple's continuing global retail expansion. But the executive quickly proposed changes that didn't sit well with some at Apple, including the new staffing formula. Many of Apple's salespeople instead remained fond of former retail chief Ron Johnson, who left for J.C. Penney Co .

Apple said on Monday a search for a new retail chief is under way.

Now Mr. Cook is placing some big bets on a new group of executives. They include Mr. Federighi, who has largely stayed out of the limelight. He is a very technical executive who has spent much of his career to date in enterprise software. But he proved himself on the consumer-business side by handling the release of Apple's latest Mac operating system software that went on sale this summer. Mr. Cook promoted Mr. Federighi to a senior vice president in August and gave him airtime at Apple media events.

People who have worked with Mr. Federighi describe him as smart and "calm, mature and collected." But he isn't well-known among the iOS team, said people familiar with the group.

Mr. Federighi joined Apple in the mid-1990s through its acquisition of NeXT ComputerInc., which Mr. Jobs ran. Mr. Federighi later left for business-to-business software company Ariba Inc. before being recruited back to Apple in 2009.

Mr. Federighi will share Mr. Forstall's empire with, among others, Mr. Ive. Mr. Ive has long been the brains behind Apple's hardware and is largely credited for creating the products' sleek look. A person familiar with the matter said Mr. Ive has collaborated with Apple's software design team, though others at the company note they are different areas of expertise.

Mr. Cue, who inherits the Maps and Siri teams, spent years as Mr. Jobs's point person negotiating media deals for its iTunes service. As that business expanded, he took on other products, including the fast-growing online iCloud service. Mr. Cook promoted Mr. Cue last year.

Write to Jessica E. Lessin at jessica.lessin@wsj.com