Watch: Clock Ticking On Future For Apple

Tim Cook’s launched his first genuinely new product. So what’s it going to do for Apple’s future?

The watch is the first ever Apple product where the tech’s identical in each model and the only thing you can customize is the way it looks.

Does it signal a shift towards more of a fashion and lifestyle oriented company? I hope not. 

Apple Watch is a tick forward, but I don’t think the technology and apps are life-changing and I have actually sent my watch back. I was worried it would just attract dust in my study, instead deciding to stick with my traditional watch and trusty iPhone 6 Plus.

For me there’s is a more exciting ‘dream scenario’ for Apple, where it goes onto become the defining company of the 21st century. It’s about more than just fashion – it’s about bringing technology to bear in unsticking the biggest problems in our society – but still with Apple style.

Apple Watch: It’s “Complicated”

Apple’s newly anointed Chief Design Officer Jony Ive says that the new watch borrows from centuries of watch-making traditions. The home button on the iPhone is reinvented as a rotating ‘digital crown’ on the side of the device.  

To the watch face itself are added ‘complications’ – tiny widgets that, in addition to telling you the time, add extra bits of information such as an alarm, date, temperature or calendar appointment.

It’s "complicated": 2 million different ways to see time

‘Complications’ are a tradition watch-making term. But it seems extraordinary that Apple Store employees have been instructed to boast to customers trying on the new watch that it supports “2 million complications” – or ways of personalizing your watch face.

Steve Jobs was obsessed with simplifying technology – and it’s questionable whether he would ever have approved a product that’s so, well, complicated. 

When the iPod, iPhone and iPad were first released, they all looked exactly the same… Jobs was obsessive about design but very keen on making all those choices for you. 

Don’t get me wrong – the Apple Watch can perform some impressive new tricks – it can share your heartbeat with a friend, make a phone call from your wrist and open a hotel room without fiddling around for a pesky key card.

But what Tim Cook’s Apple has been less good at articulating is what the new smartwatch is for – what problem it’s trying to solve.

Steve Jobs told us that the iPod was “a thousand songs in your pocket”. The iPhone was “three revolutionary products in one… a widescreen iPod with touch controls, a revolutionary mobile phone, and a breakthrough Internet communications device”. The iPad was a “lean back” content consumption device that filled the gap between a smartphone and desktop computer.

At the initial preview of the watch in September 2014, the emphasis was on range of features and look-and-feel – but many were analysts were left scratching their heads at quite what the point of Apple’s latest gadget was. They expected to learn more when Apple ‘launched’ the Watch officially in March 2015, but were left asking the same question.

“Platform Thinking” And The Power Of The Ecosystem

One thing that the new watch definitely does do is lock customers further into the Apple ecosystem. Like the first iPod required a Mac computer to sync music to it, the Apple Watch requires an iPhone 5 or 6 to function at all. This cleverly drives iPhone upgrades and prevents people from ‘switching’ to a rival Android, Windows or Blackberry smartphone.

Tim Cook likes to claim that: “Apple has unique strengths in products, software and services”. I think it’s a bit simpler than that. Apple products have the reputation that they “just work”, and indeed they have made technology more accessible and made us more connected. Add to that the 1,300,000 apps available to download in the App Store and you have a very powerful platform that is seamless across multiple devices. People (willingly) get locked in to Apple’s “walled garden” and it is difficult to persuade them to make the move outside it.

Samsung on the other hand is highly reliant on Google’s Android mobile operating system for smartphones and tablets, and on Microsoft for Windows PCs.

When I did a head-to-head analysis of ‘Apple vs. Samsung: Who Will Win?’ in 2013, I was critical of Apple’s slower product pipeline – specifically its then lack of big-screen iPhones and indeed a smartwatch. “Customers want what we don’t have” was the title of a leaked slide in an Apple strategy presentation.

But the launch in September 2014 of the iPhone 6 and even larger6 Plus – although clearly evolutionary rather than revolutionary – does seem to have put paid to many people’s main reason for switching from Apple to Android. 

Indeed, people are now switching back from Android to Apple. In his last earnings call, Tim Cook said the current iPhone lineup had the highest Android switcher rate in “any of the last three launches in the three previous years”. This is borne out in this chart above just released from BI Intelligence. It predicts that Apple – in addition to making over 70% of the profits in the smartphone industry – could now overtake Android as the biggest smartphone provider in the US.

According to ‘Strategy Rules’, a new book written by business-school professors David Yoffie and Michael Cusumano, the ability to harness the value of an "industry-spanning platform rather than merely products" is the key to success for tech companies past, present and future.

Bill Gates got there first with Windows in the 1990s, making it the dominant PC player within a few years. Steve Jobs achieved it with the tight integration of Macs, iPods, iPhones, iPads – and the iTunes Store, App Store, and now iCloud platforms which tie them so closely together.

Yoffie and Cusumano point out the same thinking applies to the tech leaders of the next generation as well: Google's Larry Page, Facebook's Mark Zuckerberg, Amazon's Jeff Bezos, and Tencent's Huateng Ma all have a deep understanding of "platform thinking," they argue.

Apple 3.0 – An Exciting Future?

My sense is that Apple is doing well enough – for now. After a consistent record of stellar financial results, Tim Cook has certainly grown in stature and confidence. And Angela Ahrendts has been a great hire as SVP Retail & Online Stores (and future CEO contender). But as the above diagram suggests, what Apple’s org chart could really do with is a bit of a rocket up it.

Analyst Adnaan Ahmad at German investment bank Berenberg warns that the kind of spectacular revenue growth which Apple has seen in the last decade won't be sustainable from just smartphones and other mobile devices over the longer-term. Indeed, iPad sales growth has already stalled. Ahmad argues that Apple’s a strong brand with a history of “disrupting” industries, and that it needs an “out-of-the-box” move into a new market. Otherwise, “the key debate will always be about your ability to sustain these abnormal margins in your iPhone business”.

Ahmad wrote an open letter to Tim Cook recommending the purchase of electric carmaker Tesla. This offers not just an opportunity to acquire an innovative company but also its founder Elon Musk. Dubbed “the new Steve Jobs”, Musk is one the most visionary entrepreneurs of our time. Although Musk has said that this is “highly unlikely”, rumors persist. Serial entrepreneur Jason Calacanis recently predicted, “Apple will buy Tesla for $75b in 18 months - it’s a lock (in my mind).”

Through Tesla, Musk is also driving improvements in battery technology. This is also an area of keen interest to Apple. Short battery life is still one of the biggest frustrations on the iPhone – and already the Apple Watch – which can barely last a day between charges.

Apple may of course build a car on its own. There have already been reports of a massive project at Apple, with hundreds of executives working on an electric minivan and an Apple self-driving car has been spotted on the roads. 

Last week, Jeff Williams, Apple’s SVP Operations, told a tech conference, “The car is the ultimate mobile device, isn’t it?” 

And Apple has already introduced ‘CarPlay’, an interactive dashboard technology adopted by Ferrari, Volvo and Mercedes-Benz and due in 40 car models by the end of the year.

So How Close Are We To The Dream Scenario For Apple?

Apple will continue to expand its ecosystem into new areas and there could be big developments afoot.

But right now, all we know for sure is that we have a bigger-screen iPhone and a fashion-led watch. The current strategy still seems too incremental.

The dream is an Apple powered by a restless corporate technology entrepreneurship, design and fashion. Only then will it go on to become the company of the 21st century.

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Written by

Steve Tappin