Where is the smartphone heading towards?

When the iPhone was introduced in 2007, Steve Jobs clearly outlines the issues with the then smartphones, like the so called internet, wasted space for physical keyboards, etc. But as I was reading this article from MacWorld, I was wondering what would have Steve Jobs done if he saw the iPhone 6 or 6 Plus today and what would he change in it (assuming he never created the iPhone) to make a better smartphone? I have no clue, not even a hint.. 

The iPhone has homogenized the lineup to the point where the denominators are so common, you practically have to study the tech specs to find a difference: a few more megahertz here, an extra megapixel there. The smartphone war has become a battle of inches and millimeters, and while there are plenty of choices, when you pit the Galaxy S6 against the HTC One M9, or the iPhone 6 Plus against the Galaxy Note 4, the differences between them are getting a lot less obvious.
— MacWorld
Probably the most cliched/used picture in the modern smartphone era...

Probably the most cliched/used picture in the modern smartphone era...

I totally agree with the premise of this story and this feeling is not something new or recent. I think this trend started as early as a few years ago, when no major innovations were taking place in the smartphones. Yes there are features like Touch ID and Apple Pay, but they are more extensions than redesigns. But what would you change in the iPhone 6 other than making it much faster, have more RAM, better battery life, etc? I for one cannot think of anything from the top of my mind. Computers faced a similar fate, the modern laptops haven't changed in almost a decade. Look at the Apple PowerBook G4 that was released in 2001 and now look at the 2015 MacBook Pro, that are 14 years apart. Yes the current model is thinner, more shinier, more faster, made of aluminum, but it has a clear close resemblance to the 2001 one and one can strongly argue that the basic form factor of a laptop has not changed. These two laptops don't differ as much as the first generation iPhone differed from say a Blackberry smartphone in 2007. Hence in summary I think we are going to be stuck with these "iPhone like smartphones" for a while and that might not be such a bad idea!

Apple PowerBook G4 released in 2001 (Source: Apple.com)

Apple PowerBook G4 released in 2001 (Source: Apple.com)

Apple MacBook Pro 15", 2015 model (Source: Apple.com)

Apple MacBook Pro 15", 2015 model (Source: Apple.com)

Google's Apple business

Its no secret that Google makes a lot of money from Apple (in 2012 Google was making four or five times money from iOS than Android). But how much exactly are we talking about here? Google apparently makes almost 10% of its revenue from Apple, in fact just from iOS according to  UBS (via AppleInsider)! Its just a staggering number that goes to show how dependent Google is on Apple and I am not so sure if the vice versa is so true. 

Agreed that Gmail is one of the best email services out there and Google search has unprecedented popularity on the Internet, but both Apple and its customers seem to care more and more with every passing day about privacy and security of their information. And how much ever Google tries to defend itself, its business model (at least as of today) needs it to look into consumers data (which the consumers want to keep private most of the times). So Google and Apple customers are drifting farther apart in philosophy constantly. It is only a matter of time that something gives way here. One such thing could be the non-renewal of the Google Search in iOS, deal by Apple, that could cost Google a significant amount of revenue (in billions) on a yearly basis. The article notes the possible alternatives as Yahoo, Bing and DuckDuck Go, but will any of them qualify as a worthy replacement to Google to be the default Search on iOS? 

An existing search deal is due to expire this year, and Google investors are reportedly worried that Apple will reject a new one. In a research note to investors obtained by AppleInsider, UBS estimates that Google will generate $7.8 billion in revenue from its iOS deal this year, or about 10 percent of gross revenue... Assuming a 50 percent “switchback” rate, that would roughly halve the impact on gross revenue, and reduce the net revenue hit to 3 percent, in part because Google would no longer be paying Apple a lump sum.
— UBS via AppleInsider

Apple Watch's Sales Predictions

With March 9th, when Apple is supposed to announcing the Apple Watch for the second time with final set of features and complete details about pricing, coming closer and even with Apple's CEO Tim Cook going on a rampage of sorts promoting the Apple Watch all over the world (via 9to5mac), one thing no one seems to be able to predict is how popular Apple's newest gadget will turn out to be! 

When we asked analysts last September to estimate how many Apple Watches the company would sell in calendar 2015, the average was 22.6 million... We surveyed our analysts again today, seven days before Apple’s Spring Forward event, and got nearly the same average — 22.47 million.
— Fortune

This scenario reminds me very much of the the days prior to the original iPhone's launch in 2007; yes there was this great new gadget from Apple that looked cool and seemed to work flawlessly, but why does anyone need it? The same thing pretty much happened around to the iPad launch as well (remember the "its just a bigger iPhone" thing). Hence it looks like the Apple Watch is following suit in the right direction of its predecessors in ensuring to be a hit! 

We didn’t ask for an average selling price, but among those who offered one, the mean ASP was $416.
— Fortune

But an ASP or $416 for a premium smartwatch that starts at $349 does sound terribly shortsighted, but knowing most of these analysts, they seem to have no clue when it comes to predicting Apple or AAPL anyways, so were we actually expecting any better from them? 

Vesper for iPad

Vesper is a popular, simple but effective note taking App for the iPhone created by John Gruber of Daring Fireball fame and his buddies. Recently they introduced Vesper for the iPad and in almost first of its kind move, they raised the price of their universal App, to $9.99 from less than $5 before. This is really against all tide of the race to the bottom approach that has plagued the App store for a while now and that has been heavily criticized by one and all. 

Now that Vesper supports all iOS device layouts, we’re raising the regular price for the app to $9.99. With fast, reliable, unlimited sync, we think that’s a great value. But for a limited time, we’re making this version available for just $7.99. And it’s a free update for everyone who’s already purchased any previous version of Vesper, all the way back to 1.0.
— John Gruber
Vesper for iOS

Vesper for iOS

Vesper for iOS

Vesper for iOS

Though the motive of this move is obviously not all altruistic from the creators, as Jason Snell put it in SixColors, the creators hope to start a more healthier trend starting with their App where users start paying what the creators think their App is worth or against the race to bottom and/or in-App purchase plague that is casting a dark spell on the App store. I think there is a lot of heartfelt truth and honesty to their approach and we all can only hope that more developers choose their way over the other way! 

The basic problem is that casual App Store users go for free apps first, and go for chart-toppers after that. And the only way to top the best-selling charts is with super-low prices. And the super-low prices don’t generate enough revenue to cover the cost of developing the app... Instead, we want to embrace the users who are looking for the best app, and who are willing to pay a fair price for it if they think Vesper might be it. Going low didn’t work; we lose nothing by trying to go high.
— John Gruber via SixColors

iOS v/s Android

There is nothing more obvious than the fact that iOS and Android are competitors and are pretty much the only ones in the smartphone market as it stands today. Though iOS had a few years of head start to Android, Android soon caught up to iOS and eventually beat it in the market share by a huge margin, globally. Most recent data (via BusinessInsider) suggests that the trend that has been valid in terms of market share when it comes to smartphones has not changed much in the last couple of years. That is Android has close to 75 to 80% while iOS has close to 18 to 20% of the global smartphone market. 

iOS v/s Android smartphone market share as of Feb 2015 (source: BusinessInsider)

iOS v/s Android smartphone market share as of Feb 2015 (source: BusinessInsider)

Everyone in the Apple blogosphere (including me) has always argued that the market share alone is not the complete story and it is only wise to compare the profit share as well in the smartphone market as Apple doesn't typically play in all the smartphone markets that Google does. In terms of profit share, Apple has trounced Google (by a bigger margin than Google has trounced Apple in marketshare) for quite a while now. The recent data (via AppleInsider) on the profit share of iOS v/s Android in the smartphone market suggests the same trend holds true. Apple makes almost 9 times more money that Google from its mobile devices. 

iOS v/s Android smartphone profit share as of Feb 2015 (via AppleInsider)

iOS v/s Android smartphone profit share as of Feb 2015 (via AppleInsider)

But just like how, concluding that Google is winning the smartphone race based on the market share data, is absurd, it is equally absurd to conclude that Apple is winning this race based on the profit share data. The missing parameter in this context is the objective of each of the two companies for their mobile operating systems. Apple's is a product company and its objective is to make the best products (according to it) and the boat load of profits it makes is just a by product or a confirmation that its doing its job. Google's objective with Android is to be omnipresent or be installed in the most number of devices as possible across the globe, to increase is install base for its ads and other related businesses. So based on these, shouldn't we conclude that both companies have succeeded in their respective missions? I think so and this statement is true at least as of today. But the biggest loser in this race is and has always been Microsoft. It doesn't even feature in some of the tables and plots above with a non-zero value! 

But just like how, concluding that Google is winning the smartphone race based on the market share data, is absurd, it is equally absurd to conclude that Apple is winning this race based on the profit share data.

Note: It might be wise to look at micro markets for a more apt comparison of these two mobile strategies. Like how Apple is gaining and maintaining a strong foothold with its iOS devices in the Enterprise market (via VentrueBeat) or how Google is paving itself a nice niche over taking Apple in the educational market (via BusinessInsider) with its Chrome books (I still think Chrome OS is the future of Android by the way).

Apple still rules the mobile enterprise space and is extending its lead. iOS gained another 4 percentage points, growing to 73 percent of global device activations in Q4 2014. Android device activations, meanwhile, dropped the same amount to 25 percent of total activations last quarter.
— via VentureBeat

Apple's March 9th event

Apple just sent out a bunch of invites to the press for a March 9th event in San Francisco (via WSJ) with the phrase "Spring Forward" in it. There is absolutely no doubt that the Apple Watch is going to be announced with more details about its models, pricing and features. There is some speculation that other products like the 12" Macbook Air Retina might also be announced in this event. Either way it is going to be a hardware event for Apple and they are going to be live streaming it this time as well (via Apple.com). 

Apple's March 9th (2015) special event invite (Source: WSJ)

Apple's March 9th (2015) special event invite (Source: WSJ)

Apple, the new Goldmember in town

Remember that WSJ article that threw around a few numbers for the Apple Watch production a few days back? It said that Apple plans to eventually produce one million Apple Watch Edition models every month eventually from the second quarter. A lot of people have debated the validity of this number of the Apple Watch's most premium model, that might supposedly run to even un to $20,000, according to some. But WSJ's track record from the past on such insider articles about Apple, makes it is hard not to believe these numbers however insane they are. So lets assume for the sake of argument that WSJ was right and Apple indeed is planning to make a million Edition Apple Watches per month. What does this mean for the amount of gold Apple needs to make these? This intersecting article has some fun math for you. 

Let’s assume that each Apple Watch Edition contains 2 troy ounces of gold... If Apple makes 1 million Apple Watch Edition units every month, that equals 24 million troy ounces of gold used per year, or roughly 746 metric tons... but just how much is it? About 2,500 metric tons of gold are mined per year. If Apple uses 746 metric tons every year, we’re talking about 30 percent of the world’s annual gold production.

Wow, this is crazy, there should be something wrong with the math here, right? Nope. Its just what it is. Now even if WSJ has this  number of Edition models wrong by a factor 10 or 5, its still a significant amount of gold, at around 3 to 6% of the entire gold mined globally. I guess this makes it the right time to invest in gold, huh! With more demand, its prices are sure to shoot up, if this piece of news is even remotely accurate. 

The Apple Watch Edition a watch case crafted from 18-karat gold (Source: Apple.com)

The Apple Watch Edition a watch case crafted from 18-karat gold (Source: Apple.com)

An Interview experience at Apple

The interviews (at Apple) seemed based on indirect questioning, this leaves too much room for bad judgements and assumptions in my opinion.
— Luis Abreu

A nice article on an unusual topic, this one. With thousands of Apple employees and even more job openings, we hardly get to hear the experience of going through an Apple interview. I personally haven't tried getting a job at Apple and haven't been contacted by them for one. But I have heard a lot of stories through friends of mine about the recruiting process at not just Apple, but also at other Bay Area companies like Facebook and Google. One thing that stood out to me about the Apple recruiting process was that its interviews were not traditional, in the sense, there generally is not too many direct questions like, "do you know the answer to a particular issue?", "how do you solve a particular problem?", etc., but more indirect like this article mentions. I agree with the author on how this sort of questioning might leave too much room for bad judgements, but I think this is what makes Apple different. The other companies, I have heard are more traditional in their questions, as to look at academic achievements, knowledge about particular niche topics, ability to solve certain mathematical problems, etc., but not Apple (though things are starting to change elsewhere as well in this regard). Interviews at Apple (again as an outsider on this topic) seem to be aimed at analyzing the candidate's ability to think and act differently. Very apt I would say! 

The interesting thing about the behavioral interview is that when you ask somebody to speak to their own experience, and you drill into that, you get two kinds of information. One is you get to see how they actually interacted in a real-world situation, and the valuable ‘meta’ information you get about the candidate is a sense of what they consider to be difficult.
— Laszlo Bock, Sr. VP at Google via CNET

The abysmal Smartwatch market

Independent research company Smartwatch Group provided new data to AppleInsider on Wednesday estimating that just 6.8 million smartwatches were sold last year. Those devices had an average price of $189, which is down 16 percent from the selling price of $225 seen in 2013... Total market volume in 2014 was $1.29 million, up from $711 million in 2013. Overall unit sales, however, increased 82 percent year over year.
— AppleInsider

Though these are early days for the Smartwatch market, Smartwatches (as we know them today) have been around for at least a couple of years as of now. So it is a reasonable time in their history to analyze their market a little. Looking at this article from AppleInsider, it is easy to conclude that there is no way Apple is going to compete in this market. The ASP is so low at $189  and that too already racing to the bottom from last year with a 16% decline. Though the overall unit sales almost doubled in 2014, there were only half a million of them sold every month last year (for perspective Apple sold almost the same number of Macs, 5.5million of them, in just last quarter at an ASP of $1258). Though the article doesn't have any profit margin info, how much profits can you make from a category that has an ASP of less than a couple of hundred bucks? Hence there is no way Apple is competing in this abysmal category, correct? Wrong!

Apple will start selling its Apple Watch in approximately a month from now and its starting price will be almost twice this average ASP of the market at $349. Its highest price is rumored to be 100x this average ASP at around $20,000. So the argument that "this market (without taking Apple into account or before Apple's entrance) is not making enough money", will and has never stopped Apple from entering it! Just like it might not stop the rumored Apple Car, many other arguments might, but defintiely not this one!  

The missing file picker in iOS

Neither then, nor now, am I asking for a user-accessibile files system on iOS. Traditional file systems are overly complicated and Apple has rightly hidden them away on the iPhone and iPad so normal human beings don’t have to deal with them... What I am asking for is a repository, just like Photos.app for the ImagePicker. Something that collects files all in one place so they’re easy to find. Just like Passbook for passes and Health for medical and fitness data.
— Rene Ritchie, iMore.com

I completely agree with Rene on this topic and its better late than never that we get a file picker for iOS. And I think the timing is also right as iOS has matured enough and its users are comfortable enough with it, for a file picker. I have for long wanted to replace my Dropbox folder with Apple's iCloud Drive. But unfortunately the biggest use case for me for Dropbox is an online storage drive that replaces the traditional flash drive that I have to carry around. With iCloud drive I was finally hopeful of using an Apple's service instead of a third party one (as if I have to trust one company with my sensitive files/information, it would always be Apple for me) in this regard, but as it stands now, iCloud Drive cannot replace Dropbox for me. So I am hoping for this feature on iOS as soon as possible with fingers crossed!

As of now though Apple's iCloud Drive allows users a file picker option on Mac OS, it is a nonexistent feature on its iOS (Source: Apple.com)

As of now though Apple's iCloud Drive allows users a file picker option on Mac OS, it is a nonexistent feature on its iOS (Source: Apple.com)