Apple 3.0
Or Why Apple Bought Beats plus *much* more
Many have remarked on the notably confident delivery displayed by Apple execs at the WWDC keynote earlier this month, especially given that no new hardware was introduced. Well, the reason seemed pretty obvious to me, but then I’ve been writing about some of the developments Apple teased during that keynote for more than a decade, until now without Apple making much visible progress towards building them: Dear Tim re: 10 Years After
Sure, there was progress to those of us who could see how it would all eventually fit together, such as:
* Apple introduced Siri, which I think meets the qualification I’d described to “advance the state of the art on voice recognition” (and beats the heck of its previous effort from the early 90s, codenamed “Casper”).
* Apple has continually advanced its AppleTV “hobby” while Steve Jobs teased having “ cracked” the interactive television experience in his 2011 Walter Isaacson biography.
Now comes news that Apple is releasing HomeKit and HealthKit (as well as CarPlay), which will allow Apple and its partners to integrate an “Internet Of Things” including thermostats, active-lifestyle accessories like the Nike Fuelband, which has been recently paused in its development, and even jewelry with Apple’s own ecosystem (as well as external networks like The Mayo Clinic’s).
It’s no wonder that Apple’s execs seemed so confident at WWDC, with Eddy Cue boasting of “ its best product pipeline in my 25 years at Apple” … it looks to me like Apple is sitting on a sea change that I haven’t seen anyone else even suggest before, a change big enough that I’m now thinking of it as “Apple 3.0”. It all goes back to my decade-plus-old musings on future user interfaces and how they might shape Apple’s future product lineups, including what I called a “headless home server”.
It now seems obvious that my “headless home server” is the current (and probably future) AppleTV. As I’ve long suspected, Apple will probably not be building its own TV though they might still if a more experienced TV manufacturer doesn’t step up as was the case with the iPhone when Motorola mucked up the ROKR so badly. The choice for Apple now becomes to decide which devices in the “H*Kit” constellation it releases itself, and which it leaves to its partners. The decision will be driven by the size of the market, of course. Apple will no doubt build and sell the high-profit, high-volume items itself while leaving others to its partners. So what sort of devices does this mean Apple will introduce itself?
Well, what sort of devices do consumers buy now? Many are candidates for inclusion into Apple’s new ecosystem, but the criteria are probably:
1. How much profit Apple could make selling the device
2. How often that device would be replaced (repeat business)
3. Could Apple’s version be a differentiated product? Apple doesn’t do commodity products.
4. How badly the current market leading products suck compared to what a well-designed device could be
You can estimate answers to the first two questions by looking at the size of current market.
Look first to the room with the most electronics: the living room.
We know that nearly everyone in Apple’s target demographic (people with money to spend) owns some sort of home entertainment system, whether that be a home theater or just a stereo. This is a very large market, and every device in the entertainment system is a candidate, from the screen and the speakers through the Blue-Ray on down to the lowly VCR. Most if not all are commodity products. Apple already has some experience serving music from iTunes but not so much with the speakers, even considering its iPod headphones. Beats changes that. To me, the Beats deal is all about acquiring expertise, credibility, and wearable cachet in a dynamic market where there’s plenty of room for growth, but also about wireless headphones ( LeBron James Signs On to Push Beats Powerbeats2 ), whether Bluetooth, Wi-Fi, or something else. There’s no reason that wireless headphones can’t provide even better sound than those with current standard analog audio cables, with an even higher-end experience coming through Apple’s newly announced Lightning audio specification ( engadget: Apple's new Lightning spec allows for smarter, better-sounding headphones ). People spend serious money on audiophile gear, including great cans (headphones), and the Lightning connector would give Apple a leg up on being the best. I’m tickled by my just-conceived idea that Apple might use the “iCan” name for such a product.
We also know that there is a very large market for entertainment consoles such as the PlayStation, Wii U, XBox, and even, dare I say it, Apple’s own offerings of the sort Steve referred to as “widgets” when he first demo’ed the iPhone, but which have become a not-insignificant economic engine for Apple in themselves. We call them “apps” now. Is Apple planning to build its own console? My guess would be that they would first plan to integrate someone else’s, but iOS gaming seems to be converging rapidly on the consoles ( TechCrunch: The Metal Framework Gives iOS A Lead In Gaming For The Foreseeable Future ).
Other rooms don’t seem to have such possibilities. The Roomba vacuum has a nice niche market that Apple could grow by introducing something better, possibly at a lower price, but probably won’t bother, though they might well try to convince Roomba’s makers ( iRobot) to integrate with HomeKit so that the Roomba could be controlled from a Mac or iDevice.
Thermostats have a lot of room for initial growth, but tend not to be replaced once they’re initially purchased, so I can’t see Apple doing more than leaving that market to its leaders, again through HomeKit.
In the kitchen, we’ve heard a lot over the years about smart refrigerators and the like, but this is not low-hanging fruit. Sure, it would be nice to tell Siri in the morning that I would like to grill some salmon that night, have her ask me which recipe I would like to use (or suggest a new one), and then tell me what ingredients I don’t already have that I will need to pick up on my way home from the office since my smart refrigerator already knows what ingredients I have and don’t have. But that calls for either a lot of manual data maintenance or else some really smart ingredient (and quantity!) recognition that I suspect is beyond practical just now. In the shorter term I can imagine something else that would work nearly as well: an iPad shell that attaches to the outside of the refrigerator, and when I snap the iPad into it, a kitchen app starts automagically to help me do the recipe and ingredient search and even suggest a beverage pairing, either from the market or my own cellar. Such a shell could have other applications, too. And in other rooms. Including classrooms.
And then there’s the wearables. There’s been this persistent talk of an iWatch, which I see as being sort of a cross between the Nike Fuelband and Apple’s previous-generation buttonless iPod nano. Take any sharp edges away and/or make it round and top it with curved glass, provide space for a watchband to attach, and provide bluetooth connectivity with 2-4 simple pre-loaded apps (ex: clock and fitness, much as is done with the current-generation iPod nano), and you’re done. The only question is, will Apple build that device itself or let partners like Nike do it instead. See above for the decision criteria.
Segueing to the subject of HealthKit, I should offer that I used to be the lead software developer at a prominent manufacturer of fitness equipment, and shortly after Apple introduced the iPod and AirPort I had another of my brainstorms and started lobbying my company to build wireless connectivity (for entertainment or workout-information-gathering) into its products, either using an onboard display or by plugging in an iPod. Someone else there eventually had a similar idea and they went ahead and built this, though I left soon after they began and I don’t believe their end product was very successful — in those days Wi-Fi radios were a lot more expensive than hobby-shop equivalents so my company was limited in what it could accomplish. HealthKit and cheaper Wi-Fi (or Bluetooth) should allow considerably more capability for considerably less effort.
Circling back to the subject of this post (and new board name: Apple 3.0). So what makes me think Apple has changed from its current Apple 2.0 self? Here you go:
Apple 1.0 Apple Computer, Inc. Sold computers: Apple II and Macintosh.
Apple 2.0 Sold more computers than ever but this became dwarfed by their much larger devices business: iPods, iPhones, and iPads.
Apple 3.0 Beyond the box; not just a hardware company any more
While Microsoft seems to be trying hard to replicate Apple’s integrated hardware/software prosperity in some of its recent efforts, the germ of this post is that it seems Apple is trying to go the other direction: becoming the software nervous system of the coming Internet Of Things much as Windows is the “brains” inside all those PCs in businesses, homes, and cash registers. It remains a rather profitable business for Billsmer’s inheritors even without much innovation, though of course they’ll keep trying. Even Google has had success generating revenue more indirectly with Android: becoming the de facto software infrastructure presents lots of opportunities for profit, whether Windows, Android, or … H*Kit, and right now that opportunity is just begging for some great company to jump in and take the lead. I also imagine that HomeKit will be somewhat simpler to build, improve, and maintain than a full-blown OS like Windows or Android — simpler interfaces and lots less to go wrong.
Apple 2.0 was still a hardware company. But it looks like Apple 3.0 won't be.
Cheers, y'all. |
