By Innovation Only?

Innovation and pricing: a look at what Apple told us—and didn't tell us—this week

“We’ve always believed that by giving people wonderful tools, you enable them to do wonderful things.” - Tim Cook at Tuesday’s media event, following the opening video from the keynote


Innovation.

The outrage across the internet came swiftly following Apple’s keynote presentation on Tuesday. Apple’s invites to the media titled the event with the clever wordplay: ‘By Innovation Only’. But according to the sea of hot takes it was not innovative enough.

So what is innovation, what does it look like, can a company like Apple innovate on an annual cycle, and maybe most importantly, does it matter? Let’s explore.

If you look back over Apple’s 40 year history there is innovation woven amongst the successes, and non-successes. The innovations often come on the cusp of a sea change, where Apple may not be leading the pack (yet), but suitably kick starts a revolution of technological change. Of course, one of the firm’s most famous home runs is the original iPhone. No, it was not the first smartphone on the market. It was not even close to being the first touchscreen smartphone on the market—but boy did they innovate.

That innovation could be seen in primarily the multi-touch technology, something that has become a standard across all devices. And if you’re familiar with the history of the iPhone, you’ll know that in reality the iPad came first with prototypes at Apple being large multi-touch screens with the plan to release a tablet product. But upon realisation that the tech could be shrunk to a handheld device it was all hands on deck to bring the iPhone to the market. Since then Apple has blazed a trail of innovation in the iPhone, with cameras, silicon, and screen technology to name a few.

To illustrate a point, I was struck in the week by this chart (pictured above) produced by Daniel Tello using Mixpanel data, an analytics service for web and mobile, showing the active iPhones across their network of sites. I’m sorry, but what you’re about to read will break you out of your bubble and into reality. Older iPhones, namely the 2014 iPhone 6 and 2015 iPhone 6S remain popular and in use by many, and in fact this data shows strong adoption of the 2017 iPhone 8 and iPhone X cohort of phones (as noted, they were largely seen as a flop at the time). Of this cohort of popular devices the iPhone 6 is about to be dropped from iOS upgrades—that alone won’t push people to upgrade but when their apps stop working it will be a factor.

There is a bucketload of innovation to be had by someone who is upgrading from an iPhone made in 2016 to an iPhone 11 or 11 Pro.

Apple’s event on Tuesday showed other areas of innovation. Namely, a smartwatch with an always-on display but still retaining 18 hours of battery life. Sure, these kind of smart watches existed on the market and in my research fall into two categories. They are either watches that have a smart element and are therefore always-on, or they are smartwatches with always-on displays and half a days battery life.

A final word from me on this, many pundits have argued that the end of Apple’s event was odd. For those that didn’t watch, or are not regular watchers, there is a normal cadence to an Apple event. They’ll kick off with some numbers related to sales and performance, maybe throw in a retail store update, and use this to set the scene for the product updates ahead. Using this standard format, it was previously possible to predict how much to expect from a keynote. If Apple kicked off the show and went straight into a product—as it did on Tuesday—you know we’re in for a packed schedule, sometimes the presenters would jog on and off stage to try and speed things up.

On Tuesday, Apple wrapped up a relatively light schedule with a retail update. Not entirely oddly placed in the narrative but totally backwards and out of character—a bit like ending a movie with the beginning.

So what was missing? On the run up to Tuesday’s event, the rumour-mill was in overdrive about these so called Apple Tags. A device, to compete with Tile, to help find lost things. Stick them on your keys, wallet, pets, etc, and be able to find them using a low-energy Bluetooth connection and some proximity guessing.

There was no sign of these so-called ‘tags’ on Tuesday; but Apple has actually given us an insight into what it has planned, scroll down the iPhone 11 Pro product page and you’ll see a header “Can you be more precise? Yes.” Reading the description, Apple details a new technology invented—should I say innovated—in-house, which makes use of a custom piece of silicon called the U1 that “uses Ultra Wideband technology for spatial awareness” to help your iPhone “to understand its precise location relative to other nearby U1‑equipped Apple devices”. Apple finishes by saying: “and it’s going to lead to amazing new capabilities.” So far, the only benefit is that an iPhone 11 can point at another iPhone 11 and experience faster file sharing with AirDrop…

But connect this detail with the rumours before the event and suddenly you have a set of technologies that allow iPhones to talk to iPhones and give them spatial awareness, and indeed “tags” to talk to iPhones (and other tags?) and allow items to be found in “space”. I suspect that when this all comes together it’ll mean that a ‘tag’ attached to your keys that have dropped down the back of the sofa will be able to be physically located by holding up your iPhone and scanning the room. Innovative.

This leaves the question, was this product cut from Tuesday’s presentation at the last minute and replaced with a short retail update? And thus, was the overall conclusion less innovative than intended. I suspect we’ll know more in October.

Pricing.

Have a conversation with anyone outside of the Apple ecosystem and you’ll pretty quickly stumble onto the subject of price. As someone said to me on Twitter yesterday “What really grinds my gears is the price tag they put on their stuff”. Since the release of the $1,000 iPhone (an innovation in pricing?), Apple has been on a price related journey and it is evident in three areas: price perception, competitive pricing in key markets, and value.

First, price perception. From both Tuesday’s event and the presentation on Apple’s website, it is clear that they are attempting to display the cost of expensive hardware like the iPhone in different ways. Visit the website and follow the customer journey to buy an iPhone and two things will strike home quickly. Apple will present a price option if you have an old device to trade in (a $400 discount at face value) and secondly present a finance option as a primary method of payment (pictured). You have to do a bit of clicking to finally be presented with the $1000 price tag. This was also true of how Apple presented the price during the keynote on Tuesday.

With this Apple ticks two perception boxes: Apple cares about recycling and the environment, and the $1000 iPhone no longer exists.

Second, competitive pricing in key markets. I was first alerted to this when reading about Apple TV+, Apple’s upcoming video streaming service, in the Indian publication Business Standard. Apple has done what it should do, and go price aggressive in important markets. India is exceptionally price sensitive, and not really into recurring subscriptions, and also dominated by big Asian brands like Jio and Hotstar. Apple is pricing Apple TV+ in India at 99Rs (equivalent to $1.50 per month). I was later made aware of Apple’s overall change in pricing strategy in key markets by this tweet, those prices may seem expensive ($1400USD starting for an iPhone 11 Pro) but they are compared to previous years very competitive and compared to the competition very competitive. As Prabhu Ram, head of intelligence group at Cybermedia Research said in The Economic Times: “It will push other players to take note, and cut rates as well”.

This competitive streak does not only apply to India, but also Apple’s home market. Scan across the list of leading smartphones and the iPhone 11 at $699 is exceptionally competitive (only the OnePlus 7 Pro at $669 beats it).

Additionally, Apple has begun to show some flexibility. For example, it is now possible to purchase an Apple Watch with a watch band of choice, rather than a default paring. The savings could be modest, but it’s a notable step. Not to mention, a continuation of Apple’s tactic of moving hardware down the line, this year we see the return of the 2017 Series 3 Watch and the iPhone 8 to fill a low-end price gap for the iPhones.

Third, value proposition. There’s a lot to say about Apple’s ongoing shifting value prop, including whether Apple is beginning to lean too heavily on the privacy element of that proposition. On Tuesday that privacy focus was less evident, and health and the human-factor came back into focus. Apple hit us all right in the feels with their video about the Apple Watch titled ‘Face to Face’ in which customers spoke of how the Watch helped them diagnose medical issues ahead of them becoming serious, or saved them from life-threatening situations.

Additionally, Apple announced a series of health research initiatives, including three research studies on hearing, women’s, heart health and movement.

Over the last few years Apple has begun to calcify a value proposition of health and wellbeing, privacy and security, and technology that works for all and enhances lives and the planet.

From Apple’s boilerplate:

Apple’s more than 100,000 employees are dedicated to making the best products on earth, and to leaving the world better than we found it.

The jury is out on whether Apple’s approach to these three elements of their pricing strategy will convince many that Apple’s pricing is fair and reasonable, but in the last 12 months it is clear that Apple has brought price and value into sharp focus.

Some further reading from this week…

Next week

The September event is behind us, and now come the products. MacStories have very helpfully broken down Apple’s software and hardware release schedules, which are bizarrely chaotic compared to previous years. The key software dates being:

  • iOS 13.0 on September 19th

  • iOS 13.1 on September 30th

  • iPadOS also on 30th (presumably it is 13.1 not 13.0)

  • watchOS 6 on September 19th

  • HomePod update also 30th but with a follow up later in the fall

  • iPadOS and iOS updates with many missing features from iOS 13 also later in fall

Next week I’ll look at Apple’s services strategy as we see it today and let’s look at some of those hardware reviews as they come in.

Apple’s September Spectacular

Just four days to go... Here's the rumour lineup

“Marunouchi has amazing energy and our teams can’t wait to welcome customers to our largest store in Japan for the first time on Saturday.” Deirdre O’Brien, Apple’s senior vice president of Retail + People on Apple’s new store in Japan

Apple gears up for its annual iPhone event - here’s what to expect:

Like clockwork Apple is hosting its September event next week, where we will undoubtedly see some new iPhones, of which we know a fair bit, but not everything. It’s fair to ask that in an era where Apple’s iPhone business is fighting tougher battles than ever before, can a slower cycle of innovation keep Apple relevant in the space?

Will we also hear more about Apple’s push into entertainment? How will Apple solidify its move into AR ahead of the long-rumoured “Apple Glasses”?

With those questions in mind and without further ado, here’s a rundown of what to expect on stage Tuesday:

iPhone

Three new iPhone models to replace the iPhone XS, iPhone XS Max, and iPhone XR. Strongly rumoured to be named iPhone 11 Pro, the iPhone 11 Pro Max, and the iPhone 11 (top marks to Apple for its continued streak of terrible naming).

We’re expecting similar designs as previous generations, with the Pro models gaining a third camera that takes wide angle shots and the lower-end model gaining a second camera for that 2x zoom.

In addition, on the hardware side it’s rumoured that FaceID will get better at picking up faces when laying flat on a surface, better waterproofing, and upgrades to the glass for more shatter resistance, and a reverse wireless charging feature for charging AirPods on the go.

The iPhone 11 (or maybe 11R?) will also pick up some new colours, green and orange are good bets, as well as continuing to pack Apple next system-on-a-chip (SoC)—the A13.

Watch

Apple’s wearable’s category, led by the watch and AirPods, continues to make big strides year-over-year. The Apple Watch, with no competition in sight, is having its emancipation moment. Last year it was unshackled from the iPhone with the addition of cellular, this year we know that goes further with watchOS 6 and over-the-air updates and downloads. But what will the hardware deliver?

Amongst rumours that the innards will not change at all, in other words remaining the Series 4, we see some hints of external tweaks. This is afterall a fashion device as well as a computer. There was a leak about titanium and the return of ceramic to the casings and some new straps.

Software wise, there are suggestions that Apple will continue to bolster the strength of its health offering with sleep tracking coming to the watch. Maybe a development of its acquisition of Beddit.

Apple TV

Now we’re straying into full on ‘maybe’ rumours. Many are arguing that Apple’s tiny TV box is overdue an update (last done 24 months ago), with an anonymous rumour pointing towards a modest update to the A12 SoC to help push graphics for Apple Arcade games. The current Apple TV features an A10X—the X indicating more graphics oomph—so the suggested move to the A12 will unlikely bolster the graphics performance much further than the current A10X.

Either way, the Apple TV will get stage time as an Apple Arcade platform.

Apple Tag

Another long-term swirling rumour, but signs are now pointing towards this one becoming a reality. The Tile-esque Bluetooth tracking devices are strongly alluded to in iOS 13 code, and the name change of Find my iPhone to simply ‘Find My’ suggests we’ll see this new hardware on Tuesday.

Apple’s revision of the item tracking tool will apparently use AR to help track items visually in the real world. It’s yet to be seen how this fits in Apple’s overall strategy, with many of their own devices already taking advantage of technologies to allow them to be tracked—especiallyMacBook Pros that can be tracked via Bluetooth by other nearby Macs. Will this really be designed for lost car keys, or something bigger?

Wildcard: Will AR glasses also debut?

Code digger extraordinaire Troughton-Smith isn’t betting his house on it, but has indicated that Apple’s AR glasses (goggles?) could be closer than we think. But, Tuesday close?

Tune in next week for my full analysis of the event.

Apple Music web interface

Earlier this week Apple revealed its card by unveiling a beta web interface for Apple Music—almost certainly the death knell for iTunes’ demise but also an important step in competing with Spotify.

Twitter immediately kicked into action showing off the slick interface, with many commenting on how this iTunes-esque style rivaled Apple Music on the iPad for ease of use.

So far a few features are missing compared to the Mac and iOS, notably ‘friends are listening to’, but with the inevitable culling of iTunes in our futures this is a solid step in the right direction.

China used iPhone vulnerabilities to target Uyghur Muslims

In last week’s issue we reported on the breaking news that Google researchers had discovered a series of vulnerabilities within iOS that exposed users by simply visiting a malicious website. TechCrunch has this week reported that the original attack was launched by a state, “likely China”, designed to target the Uyghur community in the country’s Xinjiang state.

It is suggested that the attacked formed part of an effort by the Chinese government to crack down on the minority Muslim community in recent history.

Forbes has followed up on the report to corroborate that the websites were indiscriminate in who they attacked, and the attacks also targeted Windows and Android platforms.

Apple is yet to comment on the vulnerability or its impact.

Wait, there’s more...

Siri privacy and a major years-long iOS weakness exposed

Sept 10 hardware event confirmed, iOS 13.1 hits developer channels

“This store is very ‘Miami’ to me – its special trees, the light and the new roof. It is also quintessentially Apple, marrying the outdoor lifestyle with a sense of freedom and creativity that is intrinsic to the way we work.” - Jony Ive on Apple’s new Aventura store


Improving Siri’s privacy - Apple

This week Apple announced a series of changes to Siri that directly address the furore created by an expose in The Guardian in late-July. In quick summary: contractors working for Apple were reviewing recordings created when Siri was activated, often with confidential details being heard. But interestingly, the whistleblower also said that as part of the transmission “are accompanied by user data showing location, contact details, and app data.”

So, this week Apple announced three major changes and summarised them in a blog post and a more detailed FAQ.

First, Apple will no longer by default keep audio recordings. But it will, by default, keep transcripts. Secondly, users can opt in to help Siri by transmitting audio recordings, and can choose to opt out at any time. And thirdly, when opted in, only Apple employees will have access to recordings and they will delete recordings that have been created by inadvertent triggers.

So it’s not possible to opt out of transcripts being created, and it’s still not clear how much data is being transmitted about the location, device, app to Apple.

‘Monitoring implants’ have been inserted into iPhones for years - Google

Google’s ‘Project Zero’ has posted a “very deep dive” into a series of exploits that they found in the wild. The exploits allowed thousands of iPhones a week to be hacked, and the exploit was only patched by Apple in February (the same time as the well publicised FaceTime bug).

At the time Apple wrote that the impact was that “An application may be able to gain elevated privileges”, but in reality users were compromised by simply visiting a website with no interaction required. This impacted even the most up-to-date devices.

Once the device was installed with an implant; the users location could have been uploaded; their device’s keychain, containing all their passwords, was uploaded, as were their chat histories on popular apps including WhatsApp, Telegram and iMessage, their address book, and their Gmail database.

Once the device restarted, the implant was removed. Until the user visited that same website, inadvertently.

So far, no official word from Apple—apart from the original security notes.

Apple pushes out iOS 13.1 to developers—before 13.0 even goes live

Twitter was dumbfounded, but based on the narrative leading up to this it seemed obvious that Apple would at some point be forced to make a decision about what would be in, and what would be out, of the first release of iOS 13. The primary driver, if hordes of developers are to be believed, is that the overall quality of iOS and iPadOS 13 were concerningly poor for this point in the beta cycle.

So what’s popped (back) up in iOS 13.1? Shortcuts Animations are back, Share ETA, HEVC has seen some improvements to encoding alpha channels. 9to5 has a good run down.

It’s fair to assume at this point, that WWDC was an occasion from Apple to show us the entire iOS 13 roadmap. Not just the .0 release.

There’s more…

On Twitter: @neilcybart outlines the official trailers for Apple TV+ shows, including the latest trailer for show ‘Dickinson’

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