- Things are getting a bit more serious over at Apple this year.
- The company is laying off some 600 people who worked on expensive R&D projects.
- It comes as Apple faces several challenges that threaten its dominance.
Things have been getting a little more serious over in Cupertino this year for Tim Cook.
The latest sign of the mood change came on Thursday after it emerged that Apple had laid off over 600 employees in California, per filings with the California Employment Development Department first reported by Bloomberg.
In a year when the tech industry has already cut almost 60,000 employees — with Apple's Big Tech peers slashing a considerable amount more from their workforce since they began layoffs in 2023 — that might not seem like a big deal. That's especially so when considering that Apple had about 161,000 full-time employees at the end of its last fiscal year.
That said, the move to let go of employees at a firm that rarely makes cuts has significance.
Affected employees included those involved in expensive R&D projects, such as Apple's secretive electric vehicle project, which was scrapped in February and has cost $1 billion a year since 2014; and a complex in-house project to make brighter smartwatch screens with microLED technology.
In other words, layoffs of employees on these projects — which were reported to have been shut down at the same time and had no immediate end in sight — perhaps a signal that Apple's CEO is making the company more focused.
There's no shortage of reasons for doing so.
Cook's stewardship of Apple faces arguably its biggest challenge since he took over the CEO role in 2011. The company's stock was down by over 10% at the end of March versus the start of the year, as it faces challenges on several fronts that demand its full attention.
One of its biggest headaches right now involves the product that has been its reliable workhorse over the years: the iPhone.
Since the start of the year, the smartphone has faced sales pressure in China in particular — Apple's most important international market — with rival offerings like Huawei's 5G-enabled Mate 60 Pro earning favor among consumers over the latest generation of iPhone 15s.
Data published in March by Counterpoint Research, for example, shows that iPhone sales fell 24% in the first six weeks of 2024, while overall shipments in February were 33% lower than in the same month a year ago, per Bloomberg.
Though Apple's AI announcements coming late this year could reveal new features that make iPhones seem more attractive again, Apple's secrecy over what it has been working on makes it difficult to know how its efforts on the technology of the moment compare to its rivals.
The company has also committed to the unproven sector of mixed reality, following the February release of its $3,500 Vision Pro headset. Though Cook has touted it as an immersive vision of computing that gives users an "infinite canvas," consumer interest has been slow to emerge.
As my colleague Peter Kafka noted, influential analysts like Ben Thompson have started to point out that Vision Pro is lacking sales-driving apps. Meanwhile, the likes of Mark Zuckerberg have been happily publishing critical teardowns.
Product issues aren't the only burden Apple faces, however, with the company facing legal battles of an immense scale in both the US and EU.
Last month, the Department of Justice sued Apple over claims that it has monopolized the smartphone market. In the EU, Apple has been facing regulators who are asking it to comply with the sweeping new rules of the Digital Markets Act, which aims to crack open its App Store.
These are challenges that Cook cannot afford to take lightly.