What’s Next for Apple? – Six Places They Could Go

“What’s Next for Apple?”

I’ve heard this question bantered about dozens of times over the last week following the release of Apple’s 1Q16 financial results. I wrote about some key take-aways from the quarterly financial results as I saw them here.

The Apple iPod was first introduced in 2001. This really marked Apple’s return, the second golden era for Apple if you will. But what we fail to often recognize because of the way in which we look at history through a compressed lens is that it would be another 6 years until Apple would release it’s next “killer” device, the original Apple iPhone. The iPhone wasn’t as killer then as we see it today looking at it in the rear-view mirror. I’ve talked often how the iPhone is noteworthy because it is one of the first consumer facing products (together with the Nintendo Wii Wiimote released a year earlier) to embed accelerometers and essentially digitize the physical motion of the device and incorporate that physical motion into the game (or application). But it would be another 8 or 9 months following the release of the original iPhone that Apple would open the app store to third-party developers. It was at this point that volume really began to accelerate.

A few years later (2010) Apple launched the iPad and in that same year they released the original Apple TV. It would be another five years (2015) before Apple brought their next device (the Apple Watch) to market. I suppose I point all of this out to highlight that there are

Here are a six places I think Apple could go next:

1. Gaming. Last year (2015) Apple released the fourth generation Apple TV. In many ways, it resembled its predecessors, but this one brought games to the TV. In many cases if there is an Apple TV compatible version and you already bought the game for an iPhone or iPad, the game is free. In December 2015, Apple rolled out a way to see if there was an Apple TV version of an app in the App Store. Apple is slowly making inroads into the gaming market. We are three years into the 8th generation of game consoles. The typical game console cycle lasts about 5 years so I expect we’ll see the 9th generation of game consoles launch in 2018 or 2019. There are roughly 123 million US households and approximately 51 percent of US households have a game console. The other 49 percent know what game consoles are, but aren’t interested in owning one. In other words, the market is stable and mature. But this is still a large addressable market and one in which we might expect Apple to attempt to make further inroads into.
2. Siri. Digital assistants (or AI systems) are going to exist in myriad locations and in myriad forms. I have an Amazon Echo in my kitchen and I love it. It changes the dynamics of my household. It changes the way I do things and it changes what I get done. It also changes the social interactions in my house. The way in which we communicate in my house is (forever) altered because of the presence of Alexa. And yet, with all of this Alexa would be more powerful in my home if she existed in multiple spaces – from different rooms in the house to my car. Integrating Siri into a number of different form factors makes a tremendous amount of sense for me.
3. Connected (Smart) Home. This would be a new area for Apple, but one in which I think they are well positioned. Smart home is largely about two things: functionality and aesthetics. The functionality is derived from usability and reliability. Does it work the way its suppose to? Does it integrate into other systems? Is it easy to manage? It is reliably online? Apple’s focus on simplicity in use and design position it well to be a natural player in the Smart Home market.
4. Virtual Reality. It seems everyone these days is enamoured by virtual reality. Apple has been building out a VR team over the last year and Tim Cook recently said that VR “is really cool and has some interesting applications.” Mobile will be an important platform for Virtual Reality and therefore it makes a lot of sense for Apple to be engaged within the category.
5. Wearables. Apple’s launch of the Apple Watch in 2015 ushered in its foray into wearables, but I think most too narrowly see the Apple Watch as an extension of the iPhone. The wearable market is broadening in a number of ways and Apple could be a viable player within an expanded universe well beyond just the Apple Watch.
6. Autonomous Vehicles. Everyone seems to be entering the driverless car market this days and it remains to be determined if tech companies or traditional car manufacturers will be the ones to deliver autonomous vehicles.