AAPL Apple Inc

By Tripp Mickle 

Apple Inc. said design chief Jony Ive will leave the company later this year to form his own independent design company, marking the end of an era at the iPhone maker as it shifts from an emphasis on product development to services.

Mr. Ive's departure announcement Thursday comes after several years in which he has become less involved in the day-to-day business and design work at Apple, people close to the designer said. It nevertheless means the removal of Apple's most prominent leader after Chief Executive Tim Cook, and the person who most embodies the design wizardry achieved by Apple under its late chief Steve Jobs.

The announcement is sure to raise new questions about the company's ability to develop and launch new products. It comes as sales have largely plateaued for the iPhone -- which Mr. Ive helped design and which fueled Apple's surging sales and profit for most of a decade.

Apple is seeking new avenues for growth, largely from the sale of app software, entertainment content, financial tools and other services. In April, it reported its first back-to-back drop in quarterly sales and profit in more than two years, after saying in January that those two measures had fallen in the holiday quarter for the first time ever.

Mr. Ive's planned new company will count Apple among its primary clients, and he will continue to work closely on projects with Apple, the company said. It said the design team Mr. Ive now manages will be headed by two vice presidents who will report to Chief Operating Officer Jeff Williams -- effectively demoting the team. Mr. Ive, whose title is chief design officer, reports directly to Mr. Cook.

"After so many years working closely together, I'm happy that our relationship continues to evolve and I look forward to working with Jony long into the future," Mr. Cook said in a statement.

Apple shares, which have been rising in recent weeks but remain well below their all-time high, fell by around 1% in after-hours trading Thursday following the announcement.

A close acolyte of Mr. Jobs, Mr. Ive was critical to Apple's revival from near bankruptcy in the 1990s, working alongside the Apple co-founder to design a string of product hits, including the iPod, iPhone and iPad, that transformed Apple into one of the world's most valuable companies.

But, despite his prominence in Apple's management, Mr. Ive has been less engaged in the day-to-day business at the company since he helped spearhead the launch of the Apple Watch in 2015, people close to the designer said.

Mr. Ive's departure seemed inevitable as the company transitioned to being focused on selling services from its long history of selling devices, said one of the people close to the designer. "It's not a product and design company any more," this person said.

Mr. Ive, in Apple's announcement, said the design team today "is stronger, more vibrant and more talented than at any point in Apple's history."

Mr. Cook, whose expertise is in operations, seldom visited the design studio, and Mr. Williams, also an operations expert, cut his teeth product teeth by working on the smartwatch that the company launched in 2015.

Mr. Ive's frequent absence in recent years coincided with questions from analysts and former employees about Apple's ability to innovate. While sales of the watch have grown in recent years, Apple hasn't had another massive hardware hit since the iPad in 2010. Mr. Ive's reduced presence also has contributed to a series of recent departures from the close-knit team, which had four of its designers leave over the past year.

After the watch's launch, Mr. Ive spent about two years working on Apple's new headquarters, which was billed as a homage to Mr. Jobs, who died in 2011. Mr. Ive returned to lead the design team in late 2017. He continued to split time between the U.S. and U.K. during that period, partly because his father has been ill, people close to the designer said.

Mr. Ive and his wife want to spend more time in the U.K., where he and his wife want to raise their children, people close to the designer said.

The departure will end a golden era of design at Apple. Under Mr. Ive, the design team reigned supreme at the company, calling the shots on how products looked and what functions they performed.

Mr. Ive assumed leadership of the design team in 1996, before which Apple worked with outside design firms to develop new products. He built a team of about two dozen close-knit designers who worked together to develop the tech giant's simple aesthetic and spearheaded the development of products including the iPhone.

The announcement raises additional questions about the future of the design team. Apple said Evans Hankey would serve as vice president of industrial design. Her role over the past year as an operations chief for the industrial design group had contributed to some recent departures, people close to the designer said.

Apple also named Sabih Khan senior vice president of operations, elevating the longtime lieutenant of Messrs. Cook and Williams into a higher role as the company deals with a host of supply-chain challenges stemming from $300 billion in proposed tariffs on Chinese imports that would affect all of Apple's major products.

Write to Tripp Mickle at Tripp.Mickle@wsj.com

(END) Dow Jones Newswires

June 27, 2019 19:02 ET (23:02 GMT)

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