Apple – Apps and autos

Services are the only way for Apple to hold its edge.

• The limitations of a unified ecosystem is staring to hurt Apple’s ability to differentiate in hardware.
• The single biggest complaint heard from users is that Apple iPhone screen is too small when compared to the slabs of glass made by Samsung or LG Electronics.
• This has not impacted Apple nearly as much as I thought it would but it is a still significant problem.
• The recent leaks of the digitizer for the iPhone 6 show a screen that is not much changed in size allowing the slab makers to sleep better at night.
• The digitizer is the layer that sits above the LCD display and senses the touch of the user.
• The digitizer for the iPhone 6 shows a device that is the same size as the current iPhone 5s but gets rid of the bezels at the side of the display and uses more of the real estate at the top and bottom of the device.
• In essence the screen will become fractionally wider and fractionally taller.
• This will allow Apple to maintain the same screen resolution as the existing iPhone with no detectable loss in display quality.
• Critically, this means that a new iPhone will not fragment the ecosystem even though the screen will get somewhat larger.
• Furthermore, app. developers will not have to re-write their apps for the new screen size.
• This is great for the app. developers but it limits Apple’s ability to properly address the biggest issue that it faces when competing head to head in hardware.
• This only increases the pressure for Apple to develop its own Digital Life services as its hands are increasingly tied elsewhere.
• The differentiation that Apple has in the ecosystem is its ability to deliver third party apps and services in a fun and easy to use way.
• Just like hardware, this is not an edge that will last for ever meaning that unless something is done in Digital Life services, Apple’s margins will revert to the mean.
• This is part of the reason why Apple has announced CarPlay which is effectively a screen embedded in the car to which the iPhone can deliver an enhanced experience.
• If Apple can create some killer services for the car, it will then have the perfect platform upon which to deliver these services to users and make them more sticky.
• However, the killer service that Apple has, mapping, remains woefully inadequate showing that much still has to be done by Apple to have a great offering for all segments of Digital Life.
• Hence, I remain pretty cautious on Apple as its end market is not growing and the long-term also remains very uncertain.
• I prefer the unpopular upstarts Yahoo! and Microsoft.