Apple Fall Product Event 2019

Apple held its annual fall product event in Cupertino, California this morning. Apple continued to put forth exciting products and services that will differentiate it from its obvious competition.

First — and perhaps most importantly for future growth — Apple introduced Apple TV+. On its own, this announcement might feel incremental, but it is substantial — Apple is in the business of creating unique content for its platform. Second, by adding Arcade and Apple TV+ to its subscription portfolio, it fills two gaps in its subscription lineup. If one were to purchase Music, TV, Arcade, iCloud, and News, one could be paying Apple nearly $500 annually. This is a marked departure from a traditional hardware company trying to keep consumers interested enough in its products to drive a device purchase in a category every 2–3 years. Services are expected to be between 15% and 20% of total revenue in 2019. The number is starting to be large enough to impact its valuation. Open questions: 1) What is the business model with the content creators? and 2) What’s next? I can already pay monthly for my phone. Will nondigital goods become part of the subscription mix?

Next: The camera, display, and elements (e.g., hardware, computational photography, machine learning, chipsets, etc.) are awe-inspiring. Here, it’s harder for Apple to maintain a lead, but it makes a strong case with its latest lineup of iPads, iPhones, Watches, and more. Apple and its competitors continue to leapfrog and play catch-up with one another. The engineering is mind-blowing. Cameras, displays, and the other hardware that powers games collectively sell phones — today — as do the tools that power social media. As amazing as the engineering is, these elements are table stakes to continue to drive sales and keep customers excited. Equally important, but less of a driving of near-term sales, is the platform Apple’s establishing for future, more immersive services such as extended reality (e.g., augmented reality, virtual reality, and mixed reality.) If you are in retail or healthcare, the computer vision and the visual search and inherent image recognition it enables will change how you operate.

Other key elements:

  • Apple continues to integrate vertically with investment in hardware, software, services — and, now, content. A robust ecosystem of devices and services (or content) that work seamlessly with one another is essential to locking in customers and driving lifetime value per customer. There is not exactly a network effect, but the addition of a subscription increases the utility of the devices, and vice versa.
  • Lower price points on the iPad, iPhone, and Watch will drive new sales (lots of friends hold on to their iPhone 6s and 7s) and bring more consumers into the Apple ecosystem. Even the devices that are 3–4 years old are amazing — no reason (other than application/software support) to keep them in the ecosystem.
  • Video/cameras trump audio services today. There was no mention of the HomePod or Siri today. These products and services continue to be important but apparently are not what sells devices today — at least for Apple. We’ll continue to watch the evolution of voice (and text in iMessage) as a control mechanism. Siri did appear in the demos — especially the Watch — just not emphasized.
  • Apple is helping to drive a change in how we work. Those of us in office environments are accustomed to working in application silos — text, spreadsheets, and graphics. This is archaic and rigid. The easy and seamless blend of using a mix of mediums within a single application is powerful. I already work more like this today and imagine it will open up creativity — exciting!

My question is . . . the Watch has everything but a camera, so when will Apple give me glasses or a heads-up display with a sick camera? That is the day I leave my phone at home.