What’s next for Apple?

Recently, there’s been a lot of talk about Apple ever since they became the first US company to reach a trillion dollar valuation. Apple first made a name for themselves with their user-friendly personal computers, becoming the only company to seriously compete with Microsoft in the early days of computing. They then revolutionized the industry with the release of their first iPhone in 2007. Being the first in the smartphone market gave them a sizable lead, but competitors are gaining and their global market share is beginning to shrink. As both PC and iPhone sales are now starting to slow down, the question becomes what will be Apple’s next source of big growth?

The iPhone has proved to be a massive driver of revenue growth for Apple. The iPhone currently accounts for more than two thirds of Apple’s revenue, generating more than $30 billion for the company in the most recent quarter alone. However, iPhone sales on their own cannot continue to support this trillion dollar company. 2016 marked the first time that iPhone revenue fell year over year. Recent research has also found that more people are now holding on to their older iPhones for longer. This has forced Apple to raise prices on new devices in order to continue to grow revenue and make up for their falling sales volume. Since this is clearly not a sustainable practice (as people are already upset with the insane prices of the iPhone X), Apple needs to find other areas of growth to focus on. Their solution, according to experts, may lie in wearables.

Apple first entered the wearables market in 2015 with the release of their original Apple Watch. This was met with immediate success as the Apple Watch quickly became the best-selling wearable device thus far with 4.2 million sold in the first quarter after its release. Since then, Apple has continued their push into wearables with multiple newer versions of the Apple Watch and the recent release of their AirPods. A tech research firm, IDC, recently named Apple the wearables market leader, with an estimated 17% of the global market share; but Apple won’t stop here. Tim Cook has famously said that Apple strives to “give you things that you can’t live without that you just don’t know you need today.” As Apple continues to develop new wearable products, the iPhone will take on more of a supporting role and will become even more of a platform than it already is.

Christopher Mims of the Wall Street Journal has a series of articles about Apple’s future that I would highly recommend checking out. In one of them, he predicts that the iPhone will soon become less a phone and more of a local hub for the “body area network”. Mims suggests that the iPhone’s primary purpose will become managing the ever-increasing number of sensors and devices attached to your body. To this end, Apple’s main focus is currently shifting towards developing health sensors and augmented reality wearables.

In the realm of health, Apple has: acquired the sleep-tracking hardware maker Beddit, announced a new health-tracking platform that’s in works with the FDA, and patented a new system for tracking heart rate through earbuds. According to the book The Inevitable which I read for class over the summer, it will soon be commonplace for all of us to want to track every piece of data possible about our own health. People already track basic stats such as the number of steps they take in a day or their average heartrate, and Apple wants to be there to enable even more personal health tracking moving forward.

Even more exciting than health tracking though, is Apple’s commitment to wearable augmented reality devices. Apple currently has the ARKit which allows developers to add digital objects to what you see through your iPhone camera. While this is limited at the moment to placing virtual Ikea furniture in your home or catching Pokemon in Pokemon Go, there is a lot of potential here for a new App Store like platform that closer connects the virtual world to the physical world. Apple also recently acquired the startup Akonia Holographics which makes lenses for AR glasses. Although any fully functioning AR glasses are likely very far off, this acquisition shows that Apple is serious about their new direction.

In order for Apple to continue growing beyond their trillion dollar valuation, they need to look beyond new iterations of the iPhone and double down on new products we can’t live without, that we don’t know we need yet. While this will likely include new health tracking devices and augmented reality wearables, it will almost certainly also include other devices that we can’t even imagine yet, and I for one am extremely excited to see what they come up with.

5 thoughts on “What’s next for Apple?

  1. Once Silicon Valley’s hottest startup, it appears that Apple is finally reaching maturity. I completely agree that the dependence on iPhone revenue is unsustainable and Apple is beginning to feel some pressure to establish the next home run product. With $10B in R&D and $250B in cash, Apple is the best positioned company in the world to capitalize on future trends — whether that’s AR, M&A activity (Netflix? Tesla?), or even launching its own Vision Fund like SoftBank. I’m looking forward to seeing how they manage to stay relevant long-term!

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  2. I like the idea of rethinking the phone as a “body area network.” I also wonder if they will be able to interface with new technologies like autonomous vehicles or even televisions to personalize the experience when you are interacting with them. Nice post!

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  3. Great post! I was actually reading an article yesterday on Apple’s wearables and the new Airpods. The piece detailed the fact that customers are shying even more away from public conversation. It mentioned the trend towards liking them because the earbuds let people avoid “unnecessary” conversations with people while in Ubers, walking across campus, or sitting in a coffee shop. I’m interested to see if and how Apple plays off of this apparent demand. You’re right when they say they have to adapt to the fact that the iPhone simply is reaching its plateau. I think we’re all looking forward to see what they come up with next. Thanks, Sean!

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  4. I knew that the iPhone was a big portion of Apple’s revenue but I didn’t know it was that big. I can really relate to your post because I am one of those customers that are staying with the old iPhones longer. With minimal improvements from one generation to the next and the exorbitant prices, it makes sense to stay with old iPhones longer. As professor Kane mentioned I really like the idea of the phone being a body area network and it will be interesting to see what other types of health measurements these new devices will be able to do.

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  5. It will be interesting to see, as with many of the technologies we have covered in class, what Apple would do with the data it could collect on health. People clearly enjoy tracking their own fitness, so it doesn’t seem like that large a stretch for them to track their overall health statistics as well. In light of the AI readings for class, if this data gets into the wrong hands it could easily be used to create a bias in the decision making process of an algorithm. Humans would never be able to identify it either, since the tech has taught itself. Thanks for posting this!

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