What Apple's Software Announcements Might Hold for the Future
The company announced quite a few changes at its recent developer conference. A look into some of the features and how those could help its future business.
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Last week, Apple held its annual developer conference, WWDC 2022. As usual, the company announced new changes to their operating systems, new tools for developers, and this time, some new hardware upgrades too.
While this series of events was nothing exceptional for Apple, this year’s revelations brought a few surprises. And alongside, clues about what the iPhone maker might be working on next.
If you’ve missed Apple’s keynote, The Verge made a 24-minute supercut.
In this article, I’ll zoom in on some of the announced features and explore what Apple’s motivations might be in pursuing specific areas.
But before that, let’s look at how the company’s focus has changed over time.
Changing company focus
For a long time, Apple was a hardware company. While it made software (most notably its own operating system), the main goal was to sell more hardware. Most of the apps were free and, more importantly, Apple-exclusive.
But in recent years, the trend started to change as the company began investing more in another revenue stream: its software services.
The best indication of how important it has lately become might be 2021’s earnings report, where Apple had $78 billion in revenue for its services business, “now a Fortune 50 company by revenue all on its own” — as CNBC put it.
Hardware is still very profitable, but its overall share is dropping in Apple’s revenue. Laptops, smartphones, and tablets are maturing, and there is just not a big enough market for new devices. In addition, as technology evolves, upgrade cycles also slow down.
If Apple wants to continue its aggressive growth, it must focus on software services or come up with the next big thing. And the WWDC announcements might have helped line the track for the coming train.
Conquering new industries
Apple is a fast follower. The company usually doesn’t launch products that are highly risky or haven’t been validated by the market. Instead, it takes opportunities where there is enough initial interest, refines the idea, and then launches it on a scale.
And 1.2 billion active iPhone units is a massive scale.
Just look at Tile’s example, the Bluetooth location tracker company that was greatly affected by the launch of AirTags, Apple’s competing product. Tile quickly became a niche player in its own market, dominated by the iPhone maker’s scale, technology, and distribution network. Again, 1.2 billion active iPhones.
While Apple didn’t launch any breakthrough products that would replace a key part of its revenue streams in the coming years, it did take on a few new industries.
One of the most interesting moves was the announcement of Apple Pay Later, a direct effort to compete with other buy-now-pay-later (BNPL) providers like Affirm, Klarna, or Afterpay. These services offer users quick, short-term, and most of the time, interest-free loans for online purchases. Users pay the first installment after tapping the “Order” button, and the remaining payments will be collected in weeks/months after.
Again, Apple is dominating with its scale.
The functionality’s integration into Apple Pay means that it’ll become available in 70+ countries, bringing the new payment method front and center to customers.
But the new development also raises two interesting questions:
First, how the new payment scheme would fit Apple’s ethics playbook? According to an SFGate research, 43% of Gen Z users have missed at least one payment when using a BNPL provider. And the company wouldn’t want to be seen as an evil corporation that capitalizes on financially troubled customers.
Second, should neo-banks like Revolut or Wise be worried that the iPhone maker might be going after their business? The company already has some of the financial components; what effort would it be to build the rest?
Another tidbit from WWDC’s announcement was app collaboration features. With this change, users will be able to collaborate with invited contacts in real time. The rollout starts with a few of Apple’s own apps, but developers will also get access to the API to build similar experiences. For example, users can work together on a document or see which browser tab others are viewing in the group.
And hopefully, Apple will clearly indicate when users are interacting with shared tabs. You know, just to avoid seeing the Christmas gifts early.
The company positioned the functionality as a collaboration tool for friends. Still, it’s difficult to ignore how the experience compares to other collaboration suites used in a corporate environment, like Microsoft Office or Google Docs.
Could this be the beginning of a work suite for businesses? Apple devices take a sizable share at many companies, and an expansion to software subscriptions could be a natural extension of its presence.
Although, it’d be a steep hill to climb.
Another product announcement that suits the narrative above was Freeform, the company’s whiteboard collaboration app coming later this year. Sounds familiar? If so, it’s because Apple is stepping on the toes of Miro, Lucidspark, Mural, and other whiteboard collaboration companies.
And again, this new app would be perfect for the corporate environment.
Finding the next big thing
The introduction of the iPhone had an undebatable impact on the phone industry. When Steve Jobs initially introduced the device on stage in 2007, he announced three things: a widescreen iPod with touch controls, a revolutionary mobile phone, and a breakthrough internet communicator. And soon after, he revealed that it was not three devices, but one, and showed the iPhone to the audience for the first time.
Since then, this product line alone has been fueling Apple’s growth engine. Even last year, 14 years after the device’s original introduction, iPhone was the biggest single contributor to Apple’s bottom line—$191.9 billion, to be exact.
But it’s not an infinite source of revenue, and Apple will need to find the next big thing.
One of the biggest surprises WWDC held was the announcement related to CarPlay, the company’s infotainment system. Instead of just a tablet-sized interface for nice functionalities like music or navigation (current experience), the company plans to overtake the whole front panel of compatible cars.
The new version promises deep integration with the vehicle’s real-time systems and the ability to show speed, RPM, fuel level, temperature controls, and other important details.
And now, Apple might be selling the promise here, not yet the final solution. As at the end of the keynote section, the company highlighted the following:
“…vehicles will start to be announced late next year and we can’t wait to show you more further down the road.”
The iPhone maker is long-rumored to be working on its own self-driving car, and separating some user interface elements from the secret project makes a lot of sense.
With the new CarPlay version, the company will be able to test the user experience before launching a real car, collect useful diagnostics data from partner manufacturers, and loop all that feedback into their long-term effort.
The last announced functionality that could be connected to a “big bet” initiative was better text and image recognition capabilities across apps. For example, users will be able to translate instructions from their camera’s viewfinder, pause a video to copy a piece of code, or separate image objects from their background with a simple tap.
While these features are already handy on an iPhone, they could be even more critical if Apple chooses to announce its reported mixed-reality headset. Recognizing text, nearby objects, or even people would be a foundational functionality and would help to blur borders between the environment and the information displayed.
Remember the Minecraft augmented reality demo? And that was 2019.
We’re yet to see how the company would position a mixed-reality device. Would it be a tool for entertainment and playing games, or does Apple imagine being utilized outside of home, at work, or during certain activities?
Augmented reality glasses are nothing new, but in the past, both Google and Microsoft failed to make them mainstream. Would Apple be able to pull the trick?
Technology has never been so accessible to customers as it is today.
But the complexity is also increasing: we’re expecting different things from a smartphone than what we expected 10 years ago. Are we at peak smartphone?
While Apple will surely make improvements to its product lines over the next years, it must come up with the next big thing if it wants to continue its aggressive growth. And the technological advancements the company presented during this year’s WWDC might be some of the groundwork for that.