Apple and the iPhone
The new old thing
Apple is struggling to find another blockbuster product. The old one might do
APPLE has a new hit device, so popular that it has sold out across most of America and Britain. If you order it online it takes six weeks to arrive. “Best Apple product in a long time,” sings one online review. Useful and (of course) slickly designed, it enjoys the highest consumer satisfaction of any Apple product in history, according to a study by two firms, Creative Strategies and Experian.
Such enthusiasm must be bittersweet for Apple’s bosses. The gadget in question is AirPods, a set of wireless headphones that look a lot like Apple’s traditional ear buds, just without a wire. Priced at $159, AirPods could become a business worth billions of dollars, like the Apple Watch, a wearable device that Apple started selling in 2015. But headphones are hardly the transformative, vastly profitable innovation that many have been waiting for.
That wait started only a few years after its biggest blockbuster launched. On June 29th 2007 the iPhone first went on sale. Since then Apple has sold some 1.2bn phones and notched up more than $740bn in sales from the bestselling tech gadget in history (see chart). Two-thirds of Apple’s $216bn in sales in 2016 came from the iPhone.
Atop a hill there is usually nowhere to go but down. Questions about the future of the iPhone and whether Apple will ever design another product to match it pursue the company. The relentless rise of smartphone ownership is slowing, with around two-fifths of the global population now owning one. Apple is also facing more competition, especially in China (its second most important market after North America) where sales have been declining, lending weight to fears that Apple is experiencing “peak iPhone”.
Even though Apple has been spending $10bn a year on research and development, “people aren’t banking on innovation”, says Amit Daryanani of RBC Capital Markets, a bank. That helps to explain why the firm’s shares are valued on a price-to-earnings ratio of around ten times its forecast 2018 earnings (stripping out cash), lower than the 12-14 times that the information-technology industry trades on.
加拿大皇家银行资本市场（RBC Capital Markets）的阿米特·达里亚纳尼（Amit Daryanani）表示，尽管苹果每年的研发经费高达100亿美元，但“人们没指望能有什么创新”。这可以解释为什么苹果的市盈率是其2018年预期收益（剔除现金）的10倍左右，低于信息技术行业普遍的12至14倍。
Certainly, Apple’s attempts to diversify away from its hit product have been flawed. One disappointment has been television, worth some $260bn globally. ItsTV offering is a cable box that is little more than a portal to content from other firms, such as Netflix, not the disruptive offering that Apple executives promised.
There is also justified scepticism about another possible avenue for growth: personal transportation, an industry that is worth some $10trn. In June, for the first time, Tim Cook, Apple’s chief executive, publicly discussed the firm’s ambition to develop an autonomous-car system. Apple could surely design a sleek car, but the big shift is away from ownership toward transportation as a service. Routing cars to specific places, as Uber does, is a leap.
Many people believe that Apple could expand in health care, on which people spend an estimated $8trn each year globally. Today Apple allows people to store their fitness information on their devices and offers a platform for developers to create health and fitness apps. But it is as yet unclear what Apple’s edge will be. Its stance on consumers’ privacy, which it protects more assiduously than other technology giants, may be an advantage. But dealing with a complex web of companies and reams of red tape, as any foray into health care would require, would again be a big departure from what it is used to.
Part of Apple’s difficulty in finding the next big thing may be that it is still steered by a small, insular group of executives who have mostly been at the firm since the 1990s. They include Mr Cook, who took over shortly before the death of Steve Jobs, the firm’s adored founder, in 2011. Apple is not good at hiring people from outside who could help bring new skills and ideas. Other companies have a far better record of bringing outsiders into the fold. Amazon’s Prime video offering and the work that formed the basis for Echo, its home speaker, drew on newcomers’ expertise.
Yet Apple will have every chance to adapt because of the enduring strength of its hit product. The iPhone business will not grow as rapidly as in the past but it will remain more important for far longer than people think, says Ben Thompson of Stratechery, a research firm. The iPhone 8, due to be unveiled in September, is likely to be innovative enough to encourage around 250m-300m iPhone users to upgrade, driving a new “supercycle” of sales.
Katy Huberty of Morgan Stanley, a bank, goes as far as to say that “for Apple the next iPhone will be the iPhone.” The inclusion of augmented reality (AR), which superimposes digital information onto real-world images, for example, is likely to drive strong future iPhone sales. Apple is likely to include a 3D camera in the iPhone, and it recently said it would begin operating ARKit, a platform for software developers to design new apps that integrate AR. This step is akin to when Apple launched its app store in 2008. That set off a wave of innovation in mobile apps, which in turn gave consumers more reasons to buy iPhones. One early experiment is by the retailer IKEA, which is working on an iPhone and iPad app that lets users point their phone and see what furniture looks like superimposed in a particular space.
By encouraging app developers to start work on AR now, Apple will have a two- or three-year head start on Google’s Android operating system, says Tim Bajarin of Creative Strategies. Google has launched an AR platform, called Tango, but it is only available on two devices, the Lenovo Phab 2 Pro and the Asus Zenfone AR, which have few users. If Apple can keep a lead on integrating AR into its software, that would also give users a reason to keep on preferring the iPhone over cheaper smartphones. This will be particularly helpful in China, where local brands such as Vivo and OPPO have taken share—last summer OPPO’s R9 phone, which costs just $400, overtook the iPhone in the country.
从现在起鼓励应用开发人员开始AR方面的开发，苹果将比谷歌的安卓系统领先两三年，创意策略公司的蒂姆·巴加林（Tim Bajarin）说。谷歌已推出一个名为“探戈”（Tango）的AR平台，但只能在两款智能手机上使用——联想的Phab 2 Pro和华硕的ZenfoneAR，而这两款手机的用户很少。假如苹果可以保持领先，在自家软件中集成AR，用户就又有理由继续选择iPhone而舍弃其他便宜一些的手机。这在中国尤其有用，毕竟Vivo和OPPO等本地品牌已经抢走了不少份额。去年夏天，售价仅400美元的OPPO R9手机在中国的销量已超越iPhone。
Other revenue streams are tied in part to the iPhone’s success. One area of strong growth—if the base of iPhone users continues to expand—will be Apple’s services business, which includes revenue from app sales, cloud storage, insurance of Apple devices and more. Services are already Apple’s second-largest business, having overtaken personal computers in 2016.
Spec for smart specs
Another promising new business is smart glasses, which Apple has begun referencing in its patent applications. These will overlay digital information onto the real world without the need to look down at a screen. Work that Apple has done in developing AirPods, the Apple Watch and ARKit, such as waterproofing and elongating battery life, are the building blocks for smart glasses, says Benedict Evans of Andreessen Horowitz, a venture-capital firm. Many reckon that glasses may render phones useless, but for a long while, glasses will only work with the help of the computing power of a nearby smartphone.
前景看涨的另一新业务是智能眼镜，苹果已在其专利申请中提到了这一产品。智能眼镜将把数字信息叠加在现实世界上，不需要人们再低头看屏幕。风投公司安德森-霍罗维茨（Andreessen Horowitz）的本尼迪克·埃文斯（Benedict Evans）表示，苹果为研发AirPods、Apple Watch及ARKit所做的努力，比如防水及延长电池续航时间的技术，都是智能眼镜的构成要素。许多人认为智能眼镜可能会使手机变得无用，但在很长一段时间内，智能眼镜还是需要借助匹配的智能手机的计算能力才能发挥作用。
Yet it may be another question entirely—its use of data—that matters most to Apple’s next decade. Apple has made a point of distinguishing itself from firms like Alphabet, Google’s parent company, which mine user data to target ads online. It has made a great effort to make ad blockers easy for users to install, for example. But data are increasingly central to designing the smartest software; Apple already risks lagging behind in areas such as voice recognition and predictive software if it remains inflexible about hoovering up consumers’ information. Whether to prioritise privacy ahead of innovation may turn out to be Mr Cook’s most important decision yet.