Apple – Shopping trip

Digital Life services are what Apple needs to secure its future.  

• Next week sees Apple host its overhyped WWDC developer’s conference in Silicon Valley.
• It is at this conference that Apple typically launches its software innovations leaving devices for other events.
• Hype has focused around wearables, health and smart home but none of these are likely to do anything for Apple in the immediate term.
• Wearable are a solution looking for a problem (see here) and unless Apple has come up with a use case that suddenly makes these devices a must-have, demand is likely to remain very soft.
• Health (see here) is likely to remain hobbled by the lack of unobtrusive and reliable sensing devices and smart home looks like nothing more than a certification procedure for devices to work with iOS.
• What I am looking for from Apple are moves to address its very weak Digital Life offering.
• Apple is brilliant at delivering the apps and services of third parties onto its devices but its home grown services are very limited in scope and are often substandard.
• Apps and services are not part of Apple’s core strength and this is why I suspect the Beats is the first of many M&A deals over the next few years.
• The fit with Beats is quite good in that headphones expand its hardware reach and the streaming music service is complimentary to iTunes
• However, Apple has to offer much more of its own services to users if it wants to preserve its edge and maintain its very high margin in a rapidly commoditising industry.
• Apple has struggled to create many of these services itself and this is why I can see it repeating Yahoo!’s strategy of growing its way around the Digital Life pie by acquisition.
• I am hopeful that Apple will be able to do a better job than Yahoo!
• I am still waiting for a coherent and integrated offering from Yahoo! for mobile devices.
• Unless the market chatter has got it wrong, WWDC is shaping up to be a pretty boring event with very little launched that will actually drive Apple’s top and bottom lines any time soon.