Speculation about Apple’s next product initiative may, according to some recent reports, not be a product at all, but a service. Let me explain.
Yes, it is quite possible an iWatch or some wearable gadget will be introduced later this year. The tea leaves — if not any provable facts — seem to point in that direction. That’s because Tim Cook admits Apple is interested in wearables. It’s also been reported that Apple has trademarked the iWatch name, and has some 200 people working on such a project.
Of course working on a new gadget doesn’t guarantee its success, let alone its release. Apple no doubt has lots of products under development that will never actually be produced, or won’t appear until some years have passed.
- Silly and Not-So-Silly Expectations About an iWatch and… Apple doesn't have to do a thing for the publicity engine to roll along about the possibilities of a wearable device and the Apple TV. All it takes is for the rumor mills to keep coming up with new information, regardless of whether that information has any basis or not. These days, it's fair to say that there is no actual support for anything other than the current state of the Apple TV set top box. Yes, we know Apple has a "grand vision" about where to take the product, but that doesn't mean the company deems us ready to know what that vision is. Of course, lacking solid information from Apple, it's normal to turn to the media, including rumor sites that specialize in news about our favorite fruit company. But that doesn't mean the information is necessarily accurate, although it sure seems that all the chatter about the next generation of iPhones may be right on. It's just too consistent, and reliable information no doubt easily leaks from the supply chain, since it's just too large to silence. But reports about what Apple is doing with wearable gear or a real TV set are scarce. Apple supposedly added 100 engineers to an alleged iWatch project, and has been trademarking the name in various countries. These stories, if true, indicate that Apple plans to do something, but what that something might be remains guesswork. Right now, the Apple watchers are looking at an iWatch through the eyes of existing gear. This means it'll work as an accessory to an iPhone, similar to the way the smartwatches from Samsung, Sony and other companies operate. On the other hand, why view such a device in the image of what's already gone before? Apple has had a knack to remake industries, and that doesn't mean doing the same old things. It seems that a lot of members of the media who examine this subject aren't considering a different approach. So what if Apple shipped an iWatch with a built-in phone, along with a Bluetooth headset, barely visible, which you'd use instead of putting the watch to your face, as Dick Tracy did in the comics? Why should an iWatch be tethered to another device, except, of course, optionally? Now one commentator, who actually boasts about never having used an Apple product, though it seems he invests in the company, suggests that iWatch is actually the name of something else you'll be watching — a TV set. Why iWatch? Well, as the writer in question realizes, the name iTV isn't suitable, since it's the name of an existing TV network in the UK. Sure, Apple wasn't bothered by the fact that the Beatles used the name Apple when setting up a company. Today Apple Inc. owns the entire trademark, although it's still used by the surviving members of the Fab Four. But it's not that the iTV network would necessarily be willing to license the name to Apple, or that an Apple TV set must have an "i" prefix. Don't forget Macs, with only one model, the iMac, bearing that branding scheme. But calling a TV an iWatch doesn't make it for me. Most people would assume it was meant to be a connected watch of some sort, and I fail to see how Apple would get around that perception. It's just not a sensible choice. So what about AppleVision? Forget it! I'm not a marketing expert, nor do I play one on a TV, or whatever you choose to call it. However, the jury is really still out on whether Apple can do something with the saturated TV market, or needs to in order to fix the way you interact with a TV set. If a revised Apple TV could take over the entire experience, wouldn't that be sufficient? If the prospective 2013 Apple TV was available in a version that took over your TV and the peripherals, wouldn't that greatly simplify the experience? Sure, Apple would probably prefer to replace your Blu-ray and gaming console, though they would still have to interact with your existing soundbars or other audio systems. The real problem would be handling those pathetic IR sensors for remote controls. One solution would be for Apple to provide tiny paste-on Wi-Fi sensors for each of those gadgets, so you get wide-range, non-directional control. When it comes to replacing all of your TV's content, Apple is reportedly struggling to strike deals with the entertainment companies, possibly paving the way to serve as an alternative to your existing cable or satellite provider. Sure, we've heard about cord cutting, people who no longer use cable or satellite. But the numbers of real switchers are fairly low, mostly confined to younger people who are used to iTunes and Neflix and other streaming methods. There's nothing wrong with getting your existing diet of TV channels, even if the existing interfaces suck. So Apple is also reportedly trying to make a deal with Time Warner Cable, and you assume they'd try to do the same with other carriers. It's not that most already have iOS apps. This would simply transfer control of the entire user experience to Apple. Your DVR could even use cloud-based content, rather than deal with a local box with a built in drive. Certainly it would be more reliable, but there's that limitation of hitting your ISP's bandwidth caps that might come into play. That is, unless Apple makes special deals with major ISPs to get around that limitation for customers who aren't using their own TV services. In any case, it's clear to me that we know absolutely nothing about what Apple is planning for an iWatch or an AppleVision, or Apple connected TV. That they are possibly testing such products doesn't tell us how they will be configured, or marketed. And don't dismiss the possibility of Apple licensing technology to existing TV makers. That's being done already with auto makers.
- Apple in 2014: Are There No Original Ideas? So you've heard nearly the same chatter from a number of sources about what Apple might do in 2014. Certainly Tim Cook has made some big promises, about great products and some new product categories. That ought to be quite sufficient to fuel the speculation, and there has been plenty of that. But even the vaunted tech site Ars Technica hasn't delivered any compelling new ideas. It's all about variations on the theme. Now before I go on, let me confess that I am not a product designer or engineer, and I do not play either on radio or TV. But I have written sci-fi novels and I do have a slight feeling for the future, so maybe I can contribute a little. I would, though, expect more of the tech media, and it doesn't seem they are delivering very much. So first we have the usual iterative upgrades. A faster, more energy-efficient Mac lineup, an iPad that, after a major change to the flagship product this year, will be confined to modest updates in 2014. Maybe there will be slight changes to the aging iPod lineup, but then there's the iPhone. Apple revises form factors in alternate years, even though the media hasn't gotten the memo. It would seem, then, that an iPhone 6 would look at least somewhat different. Maybe it'll have a larger screen, and several measurements between 4.5 and 5 inches have been bandied about. Logic dictates that the iPhone 5s and 5c will be sold for $99 less, each, meaning the 5c will be free with a two-year contract. Nothing surprising so far. In fact, if the iPhone 6 goes this route, the only question will be whether Apple will divide the product line with more than one new size. But since fragmentation isn't their game, I expect not. Sure, it'll have snazzy looks and all, with more powerful guts, perhaps more battery life and a camera with a higher megapixel count, but there are no surprises in any of that. So what's left? Well, the tech bloggers, and the financial pundits for that matter, demand Apple do something original. But when you ask them what they are thinking about, it's pretty much the iWatch and an Apple connected TV set. Sure, perhaps there will be an iWatch or some other wearable device of some sort. There is that unconfirmed rumor that Apple has over 100 engineers working on the product, and some executives from the fashion industry might have been hired to handle the development and marketing of wearable gear. Apple is also trademarking iWatch in some countries, but that could be a defensive move to reserve the name in case something does come down the pike. It doesn't mean it's happening in 2014. Indeed, is there a demand for a smartwatch from anyone? Does Apple have to build one? So far, smartwatches haven't gone very far. The overpriced and underpowered Samsung Galaxy Gear was a miserable failure, with Samsung being forced to confess that the claim of 800,000 sales was based solely on shipments. But that's their usual game when it comes to reporting sales. The other supposed "lock" from Apple is some sort of enhanced Apple TV box, a connected TV, or perhaps both. Much of this seems to come from the statement from Steve Jobs in that authorized biography about developing the magic interface that will revolutionize the industry. Maybe. But Jobs might also have said that to spook the competition, forcing them to deliver something, anything, to head off Apple. Just remember how a number of tablets were introduced ahead of the arrival of the iPad in 2010, but most never saw the light of day when Apple's tablet solution was launched. Of course, they've been saying that Apple has a TV set in development for a couple of years now if not longer. There are rumors that several display sizes have been sampled, no doubt for prototypes. There are no doubt prototypes aplenty in Apple's secret labs, but most of those prototypes will never be released for manufacturing and sale. True, Tim Cook has said that TV and the living room remain areas of intense interest for the company, but how or when that interest will manifest itself is still anyone's guess. All right, that's the 2014 story that you've heard about in various and sundry ways across the media. There are minor variations here and there, but does any of it come as a surprise? Well, maybe a larger iPad, but is that all Apple can do? The real question is whether there are other product segments that Apple is working on that may be reflected in new products this coming year and beyond. That's the real question that isn't being answered. Just this week, there were published reports about Google's pact with Audi, the luxury car maker owned by Volkswagen, which would install Android as part of the brand's infotainment systems. Microsoft is already there with mixed results. It seems to do all right with the Kia UVO system, but not nearly so well with MyFordTouch, a flawed design that has caused Ford to get far lower initial quality and reliability ratings. Apple has iOS in the Car under development, and Siri support is already beginning to appear. The media wants to portray this as a fight to the death between Apple and Google to control the auto interface. So far so good. But that is fairly predictable. It doesn't mean Apple will release an iCar, a full-blown motor vehicle. What's more, purchasing Tesla, the electric car maker, wouldn't make very much sense either, although some have demanded just that. At the end of the day, is Apple planning something us that'll amaze us and send us scurrying to consult credit card and checking account balances? That's the real question, but I've yet to see a compelling answer.
- Apple Music and Stats There are surveys and there are surveys. Depending on the methodology, and the accuracy of the sampling, you can get all sorts of results, and some might even be accurate to a degree. If the market research company has an ax to grind, numbers can be appropriately manipulated too, but the survey that forms the basis of this little discussion does not appear to have been performed by such a company. It comes from MusicWatch, a firm highly respected in the industry, and is based on interviews with 5,000 U.S. customers. As you'll see shortly, however, that may not guarantee an accurate result. The key metric is the number of Apple Music users who plan to pay for the service when the 90-day free trial expires, and that's 64%. Getting nearly two-thirds who intend to keep up their memberships is actually a decent result, but some of the other figures are disquieting. So we have 48% of those who sampled Apple Music no longer using it. It sits idle. Now it may be that some of these people will come back to it later, and the survey doesn't specify exactly how long these users tried the service before giving up on it, or perhaps they are just ignoring its presence. This also appears to fly in the face of the first number, that 64% will plan to actually pay for the service when the free trial is up. Does this make sense? The mind boggles. Another significant number is that 61% of those responding to the survey have disabled the auto-renew option in their iTunes accounts. Now many may be hedging their bets, but the figure is surprising, because most people who actually sign up for free trials aren't likely to consider a recurring payment until the payment comes due unless they intend to cancel. Or at least that's my impression in signing up for free trials over the years. Of the Apple customers surveyed, 77% knew of Apple Music, so there is surely room to grow. It all depends on how well Apple is promoting the service, and whether there will be more blatant appeals with the OS X El Capitan and iOS 9 releases. In all, 11% of Apple's U.S. customers have supposedly tried Apple Music. But this is a curious figure, since, worldwide, only 1.4%, or 11 million, have actually signed up for the free trial, or maybe U.S. numbers skewed higher. It would be nice to see some sort of worldwide survey. One disturbing comment comes from Russ Crupnick, Managing Partner for MusicWatch, who, in explaining the "subpar' numbers, states, "That's the disadvantage of not being the first mover in a market where very good services currently exist." That goes to suggest that Apple isn't bringing much, or anything, new to the table, and that people are already happy with Spotify and other subscription services. But cconsider the situation in the smartphone segment before the iPhone arrived. Were customers already satisfied with their BlackBerry? I expect if you polled them at the time, that would have been the case. But wait, there's yet another report about how many Apple Music users are still using the service. It comes directly from Apple, which states that the percentage is closer to 79%. It does seem more credible, considering the high percentage of users who plan to continue to use the service. Commenting on a recent survey conducted by research firm MusicWatch, which claimed only 52 percent of Apple Music trial customers still use the service, Apple said the actual attrition rate is closer to 21 percent.= True, the Apple Music advantage may be ephemeral to some. More hands-on curation, integration with Apple's ecosystem, Beats 1, and some exclusive tracks, such as the Beatles. That's hardly a new paradigm, but merely an Apple slant on existing subscription structures. So it may be less distinctive. But wait, there's yet another report about how many Apple Music users are still using the service. It comes directly from Apple, which states that the percentage is closer to 79%. It does seem more credible, considering the high percentage of users who plan to continue to use the service. When you consider the possibilities for success, don't forget that it took Spotify seven years to hit 20 million paid members. Apple got 11 million to subscribe in one month, and if seven or eight million keep their memberships, that would be a decent result. I would also assume that, by September 30th, many millions more will have decided to sample Apple Music. Sure, Spotify started from nothing. Apple already has 800 million iTunes accounts, but it's real early in the game, and it would be wrong to bet against Apple. Besides, there is just no precedent for a company with a user base that large starting up a music subscription service from scratch. Apple appeared pleased with the 11 million number; some tech pundits are skeptical. It's also possible that the early Apple Music glitches might cause some people to hold back. At the end of the day, however, I think it's more about individuals deciding if they need to subscribe to anything new, and whether what Apple is offering is on their radar. That remains to be seen. Besides, based on the first month's numbers, assuming almost two-thirds keep their subscriptions, that Apple will probably beat Spotify and then some by the end of the year. If customers are satisfied, they won't cancel, and that's where Apple has to be mindful of the initial problems and make sure most are eradicated when the holiday rush begins. Let me make it personal. I subscribed to Apple Music on the first day. While the For You feature took a while to grasp my musical tastes, it's somewhat better now. I haven't lost any music, and unwanted DRM is not attached to any of my own content. While I have not disabled auto-renew, I'm not at all sure if l want to keep it running. Maybe I'll upgrade to the family version so my son, Grayson, who listens to more music than his dad, will have access to the service.
- 2014 — The Year the Sky Didn’t Fall for Apple At the start of 2014, even the most diehard Apple fanatic might have wondered about the future prospects of their favorite fruit company. Sales didn't always meet Wall Street projections, and profits were flattening. The stock price was way down from historic highs. To no surprise, some members of the mainstream media were calling for CEO Tim Cook to take a hike. Could it be that Steve Jobs' handpicked successor was a monumental screw up, or was there a long-term plan in place that would set things right before long? Questions, questions. Many of the particulars are ably recorded in a no-holds barred editorial from Daniel Eran Dilger, a frequent guest on The Tech Night Owl LIVE, over at AppleInsider. So I will be brief about some of the details. Now understand that the perception that Apple was on the rocks was largely manufactured. When Steve Jobs introduced iterative upgrades to Apple gear, that was part of the standard upgrade cycle. When Tim Cook did the same, there must be something terribly wrong with Apple's mojo, and the company clearly lost its power to innovate. After all, Cook was the supply chain expert. What right did he have to operate a company known for its amazing innovation? You'd think that Apple was supposed to upend a market every year. The critics forget the years that passed between the first iPod, the first iPhone and the first iPad. Miracles don't come every day, but where were the trendsetting products from Tim Cook's Apple? This didn't stop iPhone sales from climbing, at a time when Samsung's sales began to falter. The claim that Samsung had it all over Apple when it came to high sales and meeting the needs of a variety of customers was shown to be shaky. Yes, Samsung still sold loads of mobile handsets, but far too many were cheap, with little profit. While Apple continued to make huge profits from iPhones, Samsung's margins continued to shrink. Tepid response to the latest Galaxy series didn't help. Apple moved far more iPhones. Amid rising sales, Apple's first maneuvers for 2014 were financial. Stock buybacks and the seven-to-one stock split pleased Wall Street. But was Apple just stalling, avoiding the question of what innovative products were in the pipeline? Yes, Apple made promises, but when were they going to deliver? WWDC came, as usual, in June. The critics said it was all about the software, but Apple added an amazing number of new features to iOS and OS X. The bill of particulars was far larger than what Google and Microsoft were promising. True, some suggested Apple bit off a little too much this time, but the bugs are being vanquished, and the end result presents many new opportunities for developers to make a profit and to benefit customers. For regular people, the real significant event came in September, with the introduction of the iPhone 6 and the iPhone 6 Plus, a phablet with a 5.5-inch display. The critics had been long clamoring for Apple to enter the larger smartphone space, but Apple, as usual, took its sweet time about developing the right product. Certainly the public embraced the new gear, with record sales the very first weekend and chronic shortages through most of the holiday season. But some people realized that the romantic ideal of the larger smartphone wasn't quite so compelling after you spent a little time with one. One-handed operation meant something, and the larger handsets could be difficult to fit in a smaller pocket or purse. And don't forget Apple Watch. An early production model was demonstrated, and delivery was promised in early 2015. October brought new iPads, but the flagship model, the iPad Air 2, thinner than its predecessor, was the lone compelling upgrade. The iPad mini 3 was little different from its predecessor aside from Touch ID, and it still cost $100 more. It wasn't such a great deal, and the jury is out how well tablets sold this holiday season. But the iPad Air 2 is, as my friends across the Atlantic are apt to say, a marvelous piece of kit. It will be hard for my wife to give up the one she is using when the Apple editorial loan expires in February. The other product intro in October, the iMac 5K, was simply stunning, particularly the picture and the technology that makes it happen for a price that even Dell couldn't match. Last I checked, Dell's 5K display is just about the same price as the 5K iMac, but Apple gives you the computer as part of the package. None of this means everything went perfect for Apple. Don't forget the missteps — or alleged missteps — depending on your point of view. So those celebrities whose nude photos, stored in iCloud, were hacked and circulated online have only themselves to blame for poor password choices. Why did they have those pictures there in the first place? But the iOS 8.0.1 update was the worst sort of failure, fixing most iPhones, but causing some to lose their cellular connections and Touch ID capability. Apple pulled the update in little over an hour, and released a fixed version the very next day, but the publicity fallout continues. Yes, Microsoft has done worse, far worse, but this is Apple. Please don't get me started about iTunes 12. The complaints haven't been stilled, and I wonder whether Apple needs to get back to the drawing board to sort things out. Some alleged scandals were just nonsense. An iPhone 6 Plus was no more prone to bending than other large mobile handsets. No, Apple didn't suddenly out of the blue sneak a security update onto Macs with OS X Mountain Lion, Mavericks and Yosemite. That particular update came using the App Store update mechanism, the successor to Software Update. Where there's an automatic install option, as there is in Yosemite, you can switch it off. Besides, the NTP security flaw, impacting the time syncing feature of OS X, Unix and even Linux distributions, could allow a remote attacker to gain control of your computer. Even the U.S. Department of Homeland Security got in the act to report the danger, so was it wrong for Apple to protect you in a way that did no harm? For 2015, we know the Apple Watch is coming, but there is no consistency on how well it'll do. And what about the fate of Apple TV? Is there an Apple TV set on the horizon? An iPad Pro, a version with a display that's 12 inches or more? Is there something out of the blue in store? And what will Apple do to flesh out the features for iOS 9 and OS X 10.11? And I will not speculate on the code name for the next Mac OS.
- Apple’s Record Quarter: But Don’t Count the… Predictably many of the stories about Apple's record fourth fiscal quarter concentrated on diminishing iPad sales. It wasn't so bad this time, some 12.3 million sales. Consider what the competition is doing, and it's not pretty. But compared to last year's results of 14.08 million, it didn't look so well. During the quarterly call with the financial community, Tim Cook boasted of sales conquests in education and the enterprise, claiming sales were what they expected. He also said that channel inventory was drawn down in the September quarter ahead of the launch of new models. That puts a positive spin on the matter. Certainly Apple delivered a credible iPad update last week. I expect the critics will find it insufficient, but Apple plays the long game. The new deal with IBM is clearly intended to move both iPhones and iPads, but it'll take time before the impact is known. Meantime, Apple is clearly not panicking over short-term sales shortfalls. Indeed, Cook calls the current sales slump a "speed bump," promising that things will get better moving forward. In response to claims that the tablet market is saturated, Cook said, "we don't see that." He pointed to high first time buyer sales rates, but added that people hold onto tablets longer than smartphones. So Apple doesn't know what the upgrade pace is yet. The tablet market for them is just too young to have a consistent picture of the replacement cycle. He continued to emphasize attempts to sell to the enterprise. There's also cannibalization, as Cook said that some of those who might have considered an iPad bought a Mac or an iPhone instead. I expect the latter is more true with the arrival of the iPhone 6 Plus phablet, the perfect all-in-one mobile gadget for some. In short, he remains bullish on future success of the iPad. The rest of the quarterly numbers were off the charts. Revenue for Apple's fourth quarter was $42.1 billion with a net profit of $8.5 billon, or $1.42 per diluted share. Revenue for the year-ago quarter was $37.5 billon, with a net profit of $7.5 billion, or $1.18 per diluted hare. Gross margins increased from 37 percent to 38 percent. So Apple returned to the "beat the street" mode, beating financial analysts, who predicted $39.85 billion revenue with $1.30 earnings per share, by a substantial and surprising margin. After Cook announced that iPhone sales were off the charts last week, one might have expected the new smartphones to be the main stars of the lineup. But not quite. So sales were 39.3 million, compared to 33.8 million last year. Analysts expected 37.5 million. But Cook reminded the assembled financial analysts that Apple remains way behind in supplying enough product, that Apple is working to boost supplies and meet demand. Right now, he remarked, "We're not even on the same planet." This leads one to wonder just what iPhone sales might have been if Apple had a few million more to sell before the quarter ended. Moving on, Mac sales really shined as Apple's personal computers again continued to grow ahead of the PC market. So, some 5.5 million were sold, with the most success reported in the portable line. Last year's Mac sales were 4.57 million for the comparable quarter, and analysts estimated 4.8 million. All this despite very modest refreshes for Macs this year aside from the brand new 5K Retina iMac. Meanwhile, PC sales continue to suffer, and it's a big question mark whether Windows 10, expected in the second half of 2015, will help. But Mac sales seem to be growing especially fast, reportedly achieving the highest industry market share since 1995. I do wonder, in passing, whether the Windows 8 debacle is making it easier for Apple to persuade people to switch to the Mac. As to the Apple Watch, it appears that sales numbers will be merged with the iPod, Apple TV and accessory sales, such as Beats headphones, in a new category that will be called "Other," when the company reports sales for the first quarter of 2015. So don't expect that Apple Watch sales will be reported separately unless they are high. Meantime, Cook declined to estimate potential sales for Apple Watch, which goes on sale next year, saying he didn't want to offer competitors any meat and potatoes to consider. But I wonder if Apple is emphasizing low expectations right now because nobody really knows the potential for a smartwatch. Clearly the current products haven't done terribly well beyond a core clientele of geeks and so-called power users. The Apple Watch may seem superficially similar to the others, but Apple clearly wants them to become not just smart gadgets but fashion statements. That's the reasoning behind persuading fashion magazines to cover Apple, and why journalists from the fashion industry were present at the September media event where the Apple Watch was demonstrated. For the December quarter, Apple is estimating revenue of between $63.5 billion and $66.5 billion. The Wall Street analyst community expected $63.5 billion, which means the stock price should be just soaring in the days to come. You can find more of Apple's numbers posted online. In any case, the attending financial people, as usual, shied away from the hard questions. Nobody asked, as a key example, about Apple's reaction to a bankruptcy filing by GT Advanced Technologies, the company that built a sapphire production plant in Mesa with Apple funding. As it stands, hundreds of employees will end up unemployed as the plant winds down operations. It's not known if GT ever produced a usable supply of sapphire for Apple's needs. Now when you look at lower-than-expected revenue reported by Google and Samsung of late, and Microsoft's ongoing troubles staying relevant, it almost seems as if Apple has a pretty clear path for growth. Maybe some third-party company will have products and solutions that Apple can't match. I'd be surprised if there wasn't a startup somewhere with the potential to build the true killer products to compete with some of Apple's offerings. But they won't be the phantom iPad and iPhone killers that the media fantasizes about year after year. Meantime, Apple is again firing on all cylinders.
Print This Article