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Apple Positions For A Post Screen World

"See the whole board"

January 22, 2019-9 min read

For companies like Apple the business game of chess that’s played goes on indefinitely. Moves set up other moves but the game never ends. The iPod setup iTunes and the iPhone. What does the iPhone setup?

Smartphones are a solved problem. The market for phones is easily measured and the incumbents have been established. There are no more surprises here. Apple gets a little less than half, the other device manufacturers get to share the other half. Smart phones are very close to being a commodity.

Moore’s Law is coming to an end. The performance gap between older and newest is narrowing considerably. That narrowing is a good thing. It means that it’s on to the next thing. And it’s the next thing that Apple is in an enviable position to execute on and take advantage of.

What do we know about the limits of smartphones? We know that they are most limited by their screen size, the necessity to hold it in your hand to use it and the lack of interaction it has with the rest of your body. Unless you’re actively using it, at best there’s a layer of fabric between you and your phone. At worst it’s behind the wall in the other room. This means that in order to get the most out of our devices we must be holding them and looking at them.

Except that statement is only mostly true. For a small minority of people Apple has already started to make the screen and hand held nature of the iPhone less important.

The death of the iPhone is greatly exaggerated. It’s not dying. But it is going to become more of a background product. Still a core product but now it becomes the foundational requirement to connect other devices to instead of the headliner. It should be viewed as the foundation of the Apple [placeholder]. Where sensors, voice and instant presence will be what brings major changes to an Apple users daily experience.

Do you own an Apple Watch? Probably not. Do you own AirPods? Probably not. Do you use Siri? Again, probably not. These three pieces are where Apple’s user experience growth is going to come from. When the majority of people are a no, and they are, it means there’s a huge store of upside.

Super Assistant

It’s no longer about connecting individuals to outside information via cellular, GPS, and applications. As stated before, solved problems. The first phase of the smartphone era was mainly about consumption, about phone output rather than user input⁴. Phase two is where that asymmetry starts to find better balance. It’s about moving away from the screen and into passive input.

Apple’s phone screen monitoring tool wasn’t just a nice way to let you monitor how much you use your phone. It was also Apple’s way to make sure you knew exactly how much you stared at your phone. What gets measured gets managed. If you know you’re staring at your phone for 2 hours and 24 minutes every day you will likely be more open to alternative forms of interaction with the digital world.

This not so subtly delivered piece of information plays right into the next growth area for Apple and the tech world. Post screen. Instead of requiring all input and output to happen through 10 square inches of glass on a phone the rest of the human body will be an active consumer and deliverer of information. Input from your voice (Siri) without having to summon a device from your pocket (AirPods) and sensors (Apple Watch) attached to locations that can actively monitor your health. 

Apple saw the future and realized that there was no real way to get to the next level with the current set of hardware. A phone wasn’t going to cut it. You couldn’t only have an in-home assistant, you needed to have that assistant with you everywhere you went. In-home was just the cost-of-entry. 

The real challenge would be to deliver the assistant to a user whenever and wherever they needed it. Look at the assistant release timeline from Apple. While other companies were going straight for the home Apple went right at the all-present smartphone. 

  • Siri first appeared on the iPhone 4S in 2011. 
  • AirPods, which are an input tool as much as an output one, came out in 2016.
  • HomePod wasn’t released until the third quarter of 2018. The last major player to bring an in-home assistant to market.

Siri and a direct line into 40% of all smart phones in the country is a powerful hand to to be holding. Juxtapose Apple’s position against the other major assistant players…

  • Google has an in-home device and a phone, Pixel, which accounts for tiny marketshare. They do have Android as a conduit for Google assistant but it’s much trickier to do a voice-AI system well when you don’t control the hardware. Microphone, speaker, and sensor components are going to become more important, not less important.
  • Amazon only has in-home devices. Which is likely why Alexa gets higher rankings than most other assistants. One stable environment, a house, and they control the manufacturing.
  • Apple controls all the manufacturing for all of its devices. It has an in-home device and a direct conduit to 40% of American smartphones. It also provides access to its assistant through the ancillary channels of Apple Watch and AirPods. 

In the race to a complete assistant solution Apple is miles ahead. They haven’t won and Siri is not the best assistant at the moment but from a long-term view the rest of the field is playing catch up from inferior positions¹.

As for health data, Apple couldn’t ask people to input it, of course. That would be prone to error and, more importantly, users are lazy. Instead you need to collect it from them. All the time. Without them having to do anything to facilitate the collection except wear something they want to be wearing. How about a good looking watch that tells times, plays music, give directions, and is your personal assistant?

Instead of Apple going to the healthcare establishment and making a product that the Virtuas and Kaiser Permanentes would approve of Apple is making the product consumers will actually use. When they get it right — which they’ve been doing without fail for 20 years — they collect a mass of users into a product. As that mass becomes a critical mass their product becomes the de facto standard. Once that happens with Apple Watch the tables will have turned and the healthcare establishment will instead be forced to adapt to Apples vision.

This is the only way to deliver on total health prevention and prediction. It must be omnipresent, foolproof, and — here’s the kicker — private.

All of those hard stances Apple took on privacy during the last few years were moves in concert with the overall healthcare strategy. Recently, a headline going around is that Apple was trolling Google with a billboard that read “What happens on your iPhone stays on your iPhone”. Of course trolling wasn’t the point of it. That billboard and all the other privacy PR moves are to reinforce in users minds that Apple will keep you and everything about your digital you private. Your messages, phone calls, Siri requests, health information, biometrics,  all of it. If you’re setting up to go full-speed at healthcare the privacy position is not a nice-to-have, it’s a full-stop requirement. 

How comfortable do you feel when you think about giving all of your health data to Google or Amazon? Two companies whose foundational business model is delivering you as a consumer to third-party sellers. Two companies who are extremely good at executing that business model. 

Market, check. Privacy, in progress, but a de facto check. That leaves capability. 

Version four of Apple Watch brought an ECG and fall-monitoring on board making it an FDA class 2 medical device. ECG can detect and diagnose irregular heart patterns. Fall-monitoring can tell when a user has fallen and then alert first-responders or take other measures. Now users can fully rely on their watch to provide medical support. Reliance pushes the watch into territory that requires the device to be FDA approved. That’s the major signal here. Apple was willing to add things to the watch that require FDA approval both before the device can be brought to market and before changes can be made to the device once it’s on the market.³ Ship, iterate, ship now becomes get approval, ship, iterate, get approval, ship. 

This makes it clear as day that the watch is intended to be a health product with other functionality. Not a consumer product with some health functionality. Apple Watch is the only⁴ full-featured wearable that is also an FDA approved health-monitoring device.

If fall-monitoring and an ECG are newsworthy we’re still very much in low-hanging fruit land. Low-hanging fruit doesn’t mean easy to do it just means there is a clear and obvious market for it. At the very top of the still-to-be-picked list you can find blood-glucose, blood pressure, body temperature, and respiration monitoring. 

In contrast to how the smartphone is a solved problem we can see the distance the smartwatch is from being solved, a long way. Add to that the size of the market still to be captured — 8% of Americans own an Apple Watch — and the potential for this device comes into focus.

Capability, relative to all other wearable manufacturers, check.

Now, once we couple AirPods to the Apple Watch and leave the house without an iPhone the input-output asymmetry of Apple’s ecosystem is reversed. Input goes way up while output goes way down. This reversal happens while still maintaining a stunning level of useful functionality that will only continue to grow as Siri matures.

Like privacy for health, AirPods are also not a nice-to-have component of the assistant play. Their function is to keep Siri present and discrete at all times. Driving, running on the treadmill, riding the subway, walking the dog, cooking, you forget you’re wearing them. And that’s the point. Double tap and there she is. If Siri is always present you add a capable input channel without having an iPhone on you all the time.

Now you might be saying to yourself, unless its dead or broken why on Earth would I not have my phone on me? Just remember that 25 years ago almost everyone was saying “why on Earth would I want to have a phone on me all the time”? The truth here is that a phone screen is a poor mechanism for input. Once Siri begins to outperform in screen intensive productivity tasks like texting, navigation, transportation, and research the tide will start to swing on voice usage. Already, it’s at least 3 times faster⁵ to set an alarm or timer with Siri than it is to…

  1. Unlock you phone (Where is my phone?)
  2. Find the clock app (Where is the clock app?)
  3. Open the clock app
  4. Turn on your alarm (If you don’t have an alarm preset add three more steps)

compared to…

“Hey Siri” …pause for two seconds… “wake me up at 7:30”

Time is precious. This simple feature is just the tip of a very large iceberg. If you can increase productivity, especially at a 2–3x rate, and give people back time you will uncover rabid demand for your product. 

As Siri gets better, and Siri is getting better, AirPods become more important. As AirPods become more important the Watch becomes more relevant. As the Watch becomes more relevant AirPods become even more important. As this cycle ramps up the iPhone will continue to remain important as the foundation and screen portion of the Apple strategy while the overall Apple ecosystem grows by fostering the growth of the new markets it’s created. 

Apple’s lackluster smartphone sales don’t look bad, they look like a great chance for a clickbait headline. They’ve added these two items that will need to be upgraded every other year or so. Both products are the best in their categories and gaining traction. Together they cost $550. Plus smartphone sales?… 

See the whole board

¹It’s hard to see how Amazon could win this one. Where does Alexa go except inside the house? Amazon would have to make a mobile device to make Alexa ubiquitous. Given that fact, Google is the clear number two. 

²Kind of like the way an app that goes in the App Store has to go through review by Apple. Little bit of irony there.

³Yes video and images are important but as a form of input they are dwarfed by the output capabilities of a smartphone. How many images or videos do you consume on your phone compared to how many you create?

⁴There are other minor consumer wearables that have FDA approval, mostly bands for Apple Watch. But zero other full-feature wearables do.

⁵This was done by yours truly in my home. Where the clock app is on my phone it takes me about 13 seconds to set an alarm. To ask Siri to do it takes just over 4 seconds. 

© 2019 Phil Andrews