Swiss to Cheese: Apple Transforms Another Industry

Apple Watch VS Swiss Watch

Another Apple product I’m unlikely to purchase — a smartwatch. I don’t need more screens to look at frankly, but I doff my smartcap to the company for the way they’ve usurped an industry that already existed and then doubled it. This approach has some parallels to the AirPod strategy, which I looked at before : take a market that exists, wait until the technology works, have a couple of shots at it, dominate it and then expand it. Here are the latest numbers, courtesy of Strategy Analytics:

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In short, Apple has not only grown its shipments by more than a ⅓, it’s eaten a sizeable portion of the Swiss watch industry’s cheese lunch. As SA’s Steven Waltzer puts it: “Traditional Swiss watch makers, like Swatch and Tissot, are losing the smartwatch wars. Apple Watch is delivering a better product through deeper retail channels and appealing to younger consumers who increasingly want digital wristwear. The window for Swiss watch brands to make an impact in smartwatches is closing. Time may be running out for Swatch, Tissot, TAG Heuer, and others.” The full report can be purchased here.

So let’s put this in a slightly broader perspective. This is a tipping point in the evolution of the watch and a hammer blow to the Swiss watch industry. While the figures don’t quite tally with Strategy Analytics’, those from the Federation of the Swiss Watch Industry show just how effective Apple has not only created a market for itself, but also usurped another’s. For years the Swiss watch industry had been relatively settled, only to see Apple — and knee-jerk competitors like Huawei and Samsung, who have also carved a market for themselves on Apple’s coat-tails — gradually erode their business. Last year shows just how far it has gone:

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This is classic Apple in many ways. There were lots of ‘this is make or break for Apple’ type stories in the first year, and overblown predictions of 2015, and 2016, had to be revised. Indeed, while overall shipments of  smartwatches rose in 2016 (from 20.8 million to 21.1 million, according to Strategy Analytics, Apple’s shipments actually shrunk, while others rose. But these were teething problems: sensors needed to be more accurate, sales channels with telcos needed to be tweaked. By 2017 Apple had fixed most of this, and the trajectory is clear. Probably more importantly, consumers realised that if you were going to put a smartwatch on your wrist, it had to be a classy one. There was no ‘good enough’ syndrome for that bit of prime real estate. And, like the Air Pods, the device needs to have a seamless relationship with the parent device.

Lessons learned? I once again wasn’t convinced about the smart watch. I haven’t bought one, and don’t intend to. But I get it; Apple is currently making much from the stories of how these devices may have saved lives. This isn’t the reason people buy these things, but it’s a good argument to win over the spouse, or conscience, and it does point to how, eventually, medtech and consumer device will merge beyond the hobbyist and fitness fanatic. And it’s not hard to see how soon enough the ear piece and the wrist will eventually become The Device, and we can ditch the smartphone altogether.

2017 Predictions

This piece was written for the BBC World Service’s Business Daily.

This year is going to be an interesting one, but in technology it’s going to be particularly so. Social media is going to see some reverses, as users start to wake up to the compromises they make in sharing information with companies, governments and the world. But the real progress is going to be making our machines understand us better, in ways that we want.

Artificial intelligence: you’re no doubt rolling your eyes at the phrase, given how many times this technology has been promised as being around the next corner. I’m with you. But I think the focus has been on the wrong place: voice. Apple’s Siri has not been a huge success — except for my daughter, who loves talking to an adult she can be rude to — and Amazon’s Alexa, though impressive, is going to confine itself to those places where we feel comfortable talking to machines: the home.

That makes it inherently limited. Ours is actually a largely text-based world — we still use email, we prefer to text, or Whatsapp our friends, and this is where AI is going to be most useful. I already use an AI assistant called Evie to schedule my appointments; she parses emails I send her and, with a little human help, sets up meetings and calls on my behalf. I save an hour or so a week.

Expect to see more of this: using natural language – the way we usually write — to interact with devices, not via special apps but via whatever channels we already use. It’s our devices — fridges, computers, databases — that have to learn our language and preferred medium, not the other way around. AI will be a success if it can master this, and this year will be key.

Indeed, the same principle will be applied elsewhere: removing the machine-like elements of our interactions. AI will help us talk to machines better, but machines will also help immerse us in experiences. Pokemon Go, the mobile app that led many people astray catching and battling weird critters, was a hit because it took a decade-old technology, augmented reality, and bolted it onto something that people actually found useful. Well, not useful, exactly, but compelling.

Augmented reality took technology into the real world, and gave it an enticing layer. The next step — using technology to shrink the distance between people and the real world. Optimists are calling it teleportation — moving you to places you wouldn’t normally go, or can’t go. That could be a 360 degree video from a live event, or drones filming from way above you, or even experiencing something akin to physical touch with someone whose far away from you. A Singapore startup offers a remote kissing machine, which it of course has called the Kissenger.

Industry is getting excited about this because it sees the possibility of creating a digital twin of a real world device — a turbine say — and then manage and experiment on that digital version of the real thing. A Malaysian company does something similar with corpses — scanning the deceased so that post-mortems can be conducted digitally. The original body is left untouched — which may please relatives, but also means the number of post-mortems can be limitless, and performed by someone on the other side of the world.

All of this technology is available now, but it still takes some vision and money to bring it to market. But what people want is clear enough: technology should bring people closer to each other and their machines, but stay out of the way as much as possible. We may not successfully wean ourselves off our mobile screens any time soon, but we could at least make what we see, hear, and do on those screens as useful, exciting and human as possible.

The Ugliness of Short Term Hacks on the Road to Wireless

Here’s a Kickstarter project to solve the problem of no audio jack which illustrates just how thorny it is: iLDOCK – charge and listen to iPhone 7 at the same time by ildockgear — Kickstarter

ILDOCK lets you use your wired headphone while charging your iPhone 7. You can also add storage via SD, TF and USB ports with Plus. 

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The problem, as some have highlighted in the comments, is that Apple rarely grants MFi status to accessories where the lightning cable doesn’t plug directly into an Apple device. In this case, one does but the external one doesn’t. Most manufacturers get around this by making the external one a microusb. I don’t mind that, in fact it helps me, but some folk aren’t crazy about it. 

There are other issues too, of course: if you have lightning headphones and want to charge, this isn’t going to help you. 

I know I’ve written before that the future is wireless, but this project, worthy though it is, merely illustrates how ugly the interim is going to look like. 

(Via Kickstarter)

Jack’s Hit: Apple’s Missing Socket

There’s been a lot of talk about the removal of the iPhone’s audio jack, most of it knee-jerk, albeit sometimes amusing. A sampling:

I’m no fan-boi, but I find most of this coverage small-minded. Yes, I get that there’s a potential inconvenience here:

  • if you don’t have the lightning-jack adapter, then you can’t use your existing earphones. 
  • Yes, Apple is prodding you in the direction of its expensive wireless AirPods. 
  • Yes, wireless tech is not quite as ready as it could be for the pairing to be seamless. 
  • Yes, these things are easy to lose.
  • Yes, using the headphone and charging at the same time is not going to be possible without some adapter. (This is an oversight, I agree.) 
  • yes, Apple makes more money, because it owns the lightning connector and makes maybe $4 off each device that uses it. (Yes, I don’t like this either. But the wireless 

But two years down the track these kinds of arguments will seem as anachronistic as those that lamented the phasing out of the floppy drive, the serial port, the parallel port, the CD/DVD-rom drive, its own Firewire and 30 pin connectors. (The ultimate Apple I/O death chart – The Verge)

Oddly, both the arguments by Apple and its supporters are also somewhat limited in their horizons. Apple argues that it needs more space inside the device to pack more goodies in. That the technology itself is more than 100 years old. That it makes it easier to waterproof the device. That audio via Lightning or wireless is actually as good as, if not a better, experience. Apple has talked about being courageous, which is a tad disingenuous: brave is risking everything on a startup, not when you’ve got $200 billion sitting around.

The real reason why being pro-jack is going to seem a little Luddite in the future is that the future is not just wireless, it’s deviceless. The smart watch tried (and in my view failed) to move the functionality of the smartphone to the wrist. It’s not a natural place for that functionality to be, because you’re still looking at, and tapping on a screen. It’s just smaller, closer to your face and strapped on. Same with Google Glass. Nice idea, but you’re still looking at a screen, and people hate you.

The device should disappear, all of its features — input, output — internalised. Preferably inside the body. But we can’t do that quite yet, hence the earbud. A good earbud should be both controller and receptor. That’s where we’re going. This is what I wrote for Reuters on the subject. Here’s what I said on Reuters TV.

Nothing too revolutionary here. It only seems so because the debate around jack’s hit has been so mundane, so parochial, as if technology should stand still, and technology companies should listen solely to their users. The phrase ‘faster horse’ springs to mind. Apple isn’t even leading the field on this. There are at least three other smartphone companies which have already ditched the audio jack — Oppo did it four years ago.

We’ll look back at the folk who protested the disappearance of the jack as slightly quaint folk who didn’t get it. Everything leads inexorably towards breaking down the barriers between us and the technology we use — until eventually it is inside our skull. Next to it is close enough for now. 

Hence Ben Thompson, who nailed it with this piece Beyond the iPhone, saying that this wireless, deviceless future is one which may not involve much of Apple at all. 

To Apple’s credit they are, with the creation of AirPods, laying the foundation for a world beyond the iPhone. It is a world where, thanks to their being a product — not services — company, Apple is at a disadvantage; however, it is also a world that Apple, thanks to said product expertise, especially when it comes to chips, is uniquely equipped to create. That the company is running towards it is both wise — the sooner they get there, the longer they have to iterate and improve and hold off competitors — and also, yes, courageous. The easy thing would be to fight to keep us in a world where phones are all that matters, even if, in the long run, that would only prolong the end of Apple’s dominance.

In that sense, Apple has never stood in the way of its own destruction. Yes, it has penny pinched — taxing accessory makers, avoiding taxes elsewhere, squeezing suppliers — but it has not shied away from making these bigger decisions. What is interesting is that in this new world to come it may be at a disadvantage. 

Apple Pay day some ways off

A Reuters piece I wrote with two colleagues on Apple’s efforts to break the mobile payments logjam (and catch up with China and Africa). In the long run, of course, they’ll likely carve out a decent business, but it’s not as smooth as it might be, and the impression we got was that Apple was facing problems not only convincing partners to jump aboard, but to make sure the process was as Apple-like for consumers as possible.

It’s an interesting conundrum that Apple faces: pretty much everything they have to do now is about ensuring their gadgets interact with worlds they can’t control – from payments to cars.

Early days, but Apple Pay struggles outside U.S.

BY MATT SIEGEL, JEREMY WAGSTAFF AND ERIC AUCHARD

More than 18 months after Apple Pay took the United States by storm, the smartphone giant has made only a small dent in the global payments market, snagged by technical challenges, low consumer take-up and resistance from banks.

The service is available in six countries and among a limited range of banks, though in recent weeks Apple has added four banks to its sole Singapore partner American Express; Australia and New Zealand Banking Group in Australia; and Canada’s five big banks.

Apple Pay usage totaled $10.9 billion last year, the vast majority of that in the United States. That is less than the annual volume of transactions in Kenya, a mobile payments pioneer, according to research firm Timetric.

And its global turnover is a drop in the bucket in China, where Internet giants Alibaba and Tencent dominate the world’s biggest mobile payments market – with an estimated $1 trillion worth of mobile transactions last year, according to iResearch data.

Anecdotal evidence from Britain, China and Australia suggests Apple Pay is popular with core Apple followers, but the quality of service, and interest in it, varies significantly.

To use Apple Pay, consumers tap their iPhone over payment terminals to buy coffee, train tickets and other services. It can be also used at vending machines that accept contactless payments.

Apple Pay transactions were a fraction of the $84.5 billion in iPhone sales for the six months to March, which accounted for two-thirds of Apple’s total revenue.

TECH HITCHES

In Australia, where Apple Pay launched a month ago, payment machines supported by one mid-sized bank reported frequent failures.

“Bendigo Bank is experiencing some unforeseen technical issues in accepting Apple Pay payments at selected merchant terminals,” a spokeswoman for the bank told Reuters, adding that a lack of wider industry engagement in launching the service limited the lead time in testing the new technology.

Apple Vice President Jennifer Bailey said such experiences were premature and not representative. “Like any set of major technology changes, it takes time,” she said. “We want to move as quickly as possible, we push it as quickly as possible.”

Facing a slowing smartphone business, Apple has taken on the payments market hoping to add ways to make its devices more appealing, and more revenue streams. Apple takes a cut of up to 15 cents in the United States on every $100 spent.

While it has long mastered the supply chain for its mobile devices, the payments ecosystem has proved harder to control, and banks in other countries have reportedly negotiated lower transaction fees, contributing to its slow global roll-out.

Apple nearly doubled its R&D spending to more than $8 billion in 2013–15 as it pushed out a wave of new products including Apple Watch and Apple Pay, as well as upgrades to existing hardware devices and new services.

RESISTANCE

Apple has leveraged its huge U.S. user base to push Pay, but has met resistance in Australia, Britain and Canada where banks are building their own products.

“Payments in general is such a complicated system with so many incumbent providers that revolutionary change like this was not going to happen very quickly,” said Joshua Gilbert, an analyst at First Annapolis Consulting.

The upshot: Apple has rolled out Pay in a dribble, adding countries and partners where it can – Hong Kong is expected to be added next – resulting in an uneven banking landscape with users and retail staff not always sure what will work and how.

In Britain, for example, $14 billion was spent via contactless cards last year, according to Windsor Holden, a Juniper Research analyst. That makes it harder to persuade people to take the extra step on their smartphone for the same checkout convenience.

“You have over 86 million contactless cards in circulation, you have to persuade Britons to register their cards to the (Apple Pay) service when they can already use them to make a contactless payment,” Holden said.

In Australia, where more than 60 percent of all card transactions are through contactless cards, reception has also been muted. A spokesman for one large retailer said he had seen “very little uptake of the payment option” in his sector. He didn’t want to be named as he was not authorized to speak publicly about the matter.

Diego Machuca, 32, banks with Apple Pay-holdout Commonwealth Bank, has an iPhone and is already “largely cashless”. He says Apple Pay is appealing, but he wouldn’t switch banks just to access that one feature. “Not over that. There’s too much work involved just for tap-and-go,” he told Reuters.

Three months after the China launch, users on online forums complained that using Apple Pay, even at popular fast-food outlets, was not as seamless as local services such as WeChat, Tencent’s messaging and mobile commerce phenomenon.

Nonetheless, Apple’s approach has spurred development in several markets where the mobile payments industry had previously not taken hold – giving it the jump on rivals Google’s Android Pay and Samsung Pay.

Android Pay only launched in the United States in March and in Britain last month for use on the latest model Android phones. Samsung Pay is available in three markets; China, South Korea and the United States.

(Reporting by Matt Siegel in SYDNEY, Jeremy Wagstaff in SINGAPORE, Eric Auchard in LONDON and Beijing Newsroom; Editing by Ian Geoghegan)

Apple Takes on Evernote?

Apple’s update to OSX allows users to import Evernote notes into Notes (if you see what I mean) painlessly and effectively: Import your notes and files to the Notes app.

As far as I know, this is the first time an app with some heft has included this capability — there are third party tools for OneNote, but no native functions. 

To me, this is the first serious challenge to Evernote, since why would you bother with Evernote if you’re an iOS and OSX user? 

There are limitations, I suspect. I can’t find any way to add tags and it seems the tags preserved in an enex/xml file are lost on import. That’s a showstopper for me. And of course some of the deeper features of Evernote aren’t there — saved searches and what have you. And if you use Android and/or Windows this is not going to help you.

But I suspect the bigger thing for most heavy users will be a sigh of relief that a player like Apple sees it worthwhile to add this feature. For many users there’s been growing disquiet as to just how  long ‘Ever’ means for the company, and the ramifications for their vast Evernote collections. 

iPad Pro Thoughts

Jean-Louis Gassée again hits the right note in his piece on the iPad Pro: Wrong Questions | Monday Note. Tim Cook shouldn’t go around saying it will replace the laptop. It might for him, but the laptop/PC has evolved to be used in myriad ways, not all of which are best suited to a big screen and unwieldy, optional keyboard. 

Why not say that the iPad Pro will helpfully replace a laptop for 60%, or 25% of conventional personal computer users? In keeping with Steve Jobs’ Far Better At Some Key Things formula, why not say that the iPad Pro is a great laptop replacement for graphic designers, architects, mechanical engineers, musicians, videographers…and that the audience will grow even larger as new and updated apps take advantage of the iPad Pro’s screen size, speed, and very likable Pencil.

And it’s not just that. Taking up his and others’ theme that at each stage of hardware evolution we’ve lacked the imagination to realise what these devices might best be used for, I imagine the big screen and power of the iPad Pro will yield uses that we so far have not considered. 

As with wearables, these devices are as much about creating (this is something I’ve never been able to do before) or extending new markets (I could do this before, but it wasn’t much fun) as anything else. I’m not about to replace my laptop with an iPad Pro, but I could see a lot of things I would love to do with it — music editing, photo editing and organising, and maybe a bit of doodling. As in Horace Dediu’s video  The new iPad is like nothing we’ve ever seen before there’s lots of great visualization possibilities too. 

Is it a work tool? Could be, for some industries. It’s not a very mobile beast. 

The question is: while developers see enough reward in supporting it with apps? 

Cook: 3D Touch a Game Changer

I think 3D Touch is the most important thing that Apple has done for a while, and I think as with all such things we don’t really see it until later. Cook seems to agree: 20 Minutes With Tim Cook – BuzzFeed News:

“But he’s most excited by 3D Touch. ‘I personally think 3D Touch is a game changer,’ he says. ‘I find that my efficiency is way up with 3D touch, because I can go through so many emails so quickly. It really does cut out a number of navigational steps to get where you’re going.’ Even with just a quick demo, it’s easy to see his point. It’s a major new interface feature, one that threatens to upend the way we navigate through our phones, especially once third-party developers begin implementing it in their applications. Apple has engineered the hell out of this 3D Touch to ensure they’ll do just that.

For Cook, 3D Touch is a tentpole feature of not just the iPhone 6s series, but of the iPhone itself and one that shows the company isn’t saving marquee innovations for those ‘tick’ years. ‘As soon as products are ready we’re going to release them,’ Cook explains. ‘There’s no holding back. We’re not going to look at something and say ‘let’s let’s keep that one for next time.’ We’d rather ship everything we’ve got, and put pressure on ourselves to do something even greater next time.’”

Force field: Apple’s pressure-based screens promise a world beyond cold glass

A piece looking at the technology behind the pressure sensing. My prediction: once people play with it they’ll find it hard to go back to the old way of doing things. Maybe typing on an touchscreen may one day feel natural, and maybe even enjoyable. 

Force field: Apple’s pressure-based screens promise a world beyond cold glass | Reuters:

SINGAPORE/TAIPEI | BY JEREMY WAGSTAFF AND MICHAEL GOLD

By adding a more realistic sense of touch to its iPhone, Apple Inc may have conquered a technology that has long promised to take us beyond merely feeling the cold glass of our mobile device screens.

In its latest iPhones, Apple included what it calls 3D Touch, allowing users to interact more intuitively with their devices via a pressure-sensitive screen which mimics the feel and response of real buttons.

In the long run, the force-sensitive technology also promises new or better applications, from more lifelike games and virtual reality to adding temperature, texture and sound to our screens.

‘Force Touch is going to push the envelope of how we interact with our screens,’ says Joel Evans, vice president of mobile enablement at Mobiquity, a mobile consultancy.

The fresh iPhones, unveiled on Wednesday, incorporate a version of the Force Touch technology already in some Apple laptop touchpads and its watches. Apple also announced a stylus that includes pressure sensing technology.

As with previous forays, from touch screens to fingerprint sensors, Apple isn’t the first with this technology, but by combining some existing innovations with its own, it could leverage its advantage of control over hardware, interface and the developers who could wrap Force Touch into its apps.

‘Here we go again. Apple’s done it with gyroscopes, accelerometers, they did it with pressure sensors, they’ve done it with compass, they’ve been great at expediting the adoption of these sensors,’ said Ali Foughi, CEO of US-based NextInput, which has its own technology, trademarked ForceTouch. ‘Apple is at the forefront.’

TOUCHY FEELY

Haptic technology – a tactile response to touching an interface – isn’t new, even in mobile devices. Phones have long vibrated to alert users of incoming calls in silent mode, or when they touch an onscreen button.

But efforts to go beyond that have been limited.

BlackBerry incorporated pressure sensing into its Storm phone in 2008. And Rob Lacroix, vice president of engineering at Immersion Corp, said his company worked in 2012 with Fujitsu on the Raku-Raku Smartphone, an Android phone that could distinguish between a soft and firm touch to help users unfamiliar with handheld devices.

But most efforts have been hamstrung by either a poor understanding of the user’s needs, or technical limitations. A vibrating buzz, for instance, has negative connotations, causing most people to turn off any vibration feature, says James Lewis, CEO of UK-based Redux, which has been working on similar touch technology for several years.

The technology powering vibrations is also primitive, he said, meaning there’s a slight delay and a drain on the battery. Early versions of pressure-sensing technology also required a slight gap between screen and enclosure, leaving it vulnerable to the elements.

Apple seems to have solved such problems, experts said, judging from their trackpads and the Apple Watch. Indeed, the trackpad carries the same sensation of a physical click of its predecessors, but without the actual pad moving at all.

The result: In the short term, Force Touch may simply make interacting with a screen more like something we’d touch in real life – a light switch, say, or a physical keyboard. With Force Touch, the device should be able to tell not only whether we are pressing the screen, but how firmly. It should in turn respond with a sensation – not just a vibration, but with a click – even if that click is itself a trick of technology.

‘What we’re going to see initially is putting life back into dead display,’ said Redux’s Lewis. ‘We just got used to the cold feel of glass.’

HARD PRESSED

To be sure, mobile is not the first industry to flirt with haptics.

For example, for car drivers, Redux demonstrates a tablet-like display which creates the illusions of bumps and friction when you run your fingers over the glass, mimicking physical buttons and sliders so your eyes don’t need to leave the road.

Mobiquity’s technical adviser Robert McCarthy points to several potential uses of Apple’s technology – measuring the force of touch when entering a password, say, to indicate how confident the user is of their selection, or keying in a numeric passcode using different pressure levels as an extra layer of security.

While Apple’s adoption of the technology has awoken the mobile industry to its possibilities, it was pipped to the post by Chinese handset maker Huawei, which this month unveiled one model with what it also tagged Force Touch technology. Pressing harder in a photo app, for example, allows you to zoom in on a picture without the usual two-finger spread.

Other manufacturers are exploring how to make touching a device more friendly, and more advanced, says Freddie Liu, CFO of Taiwan-based TPK Holding Co Ltd, an Apple supplier.

‘This is just the beginning for Force Touch,’ he said.

(Reporting by Jeremy Wagstaff and Michael Gold, with additional reporting by Reiji Murai in TOKYO; Editing by Ian Geoghegan and Raju Gopalakrishnan)”

Factbox: iPhone 3D Touch suppliers and haptics companies | Reuters

Behind the iPad’s sluggish sales

Sameer Singh offers some possible reasons for the fall in iPad sales: 

Pocketable vs. Tablet Computing | Tech-Thoughts by Sameer Singh: “With this background, the sudden decline in iPad sales may have been caused by a combination of the following factors:

  • Most high-end consumers who need iPads already own them (and as some analysts have pointed out, replacement cycles are long) 
  • Large screen smartphones have made media tablets somewhat redundant, i.e. the iPad is no longer a ‘necessary’ purchase for ‘phablet’ owners 
  • The iPad is priced out of the market segment that still finds media tablets ‘necessary’ 
  • Upmarket movement is limited because tablet use cases still haven’t evolved to cannibalize more productivity-related computing tasks (I may have overestimated the pace at which this would occur)”

To which I’d add: 

The iPad is in some ways closer to a PC than a phone in its utility vs luxury ratio. People upgrade their phones because they’re visible accessories, something that says something about the person holding it. Computers have barely hit that bar, and maybe iPads — especially since users usually cloak them in a stand/cover — don’t quite make it either. So unless there’s a really compelling performance/spec reason to upgrade, most don’t bother.

I’ve not seen data on this, but anecdotally most people I know get an iPad and then settle, rather than upgrading when the next one comes out. Of course the lack of telco subsidy for most iPad purchases adds to this. 

It’s not that iPad isn’t a great idea, but it turns out that the smarter move in a way has been to increase the size of the phone (phablet) rather than shrink the size of the computer (the iPad), at least in terms of getting people to upgrade.