While I’ve mentioned in the past, the potential for Apple to extend the iOS platform into other areas such as a watch, and to leverage the whole media aspects of the Apple TV set top box into the emerging Ultra Definition television market, it seems that in my absence from blogging about this stuff, that the whole “iWatch” rumor has caused the likes of everyone else to try and jump Apple to the punch.
The problem with doing something like an iWatch correctly though is a huge technical challenge depending on how much software you want to cram into such a device. The other one is of form factor. The square 6th generation iPod nano gave a glimpse as to the potential of an Apple-branded smart watch (when 3rd party designers came out with watch bands that housed a nano). Apple themselves created a variety of watch interfaces which obviously stoked peoples imaginations as to how Apple would do a wearable computing device. The iPod nano is not how they would do it though.
First off all, the nano, once enclosed in an accessory case, was way too bulky/thick. If Apple is going to do something like this, it is going to be as thin as technically possible. Thin/flexible screens aren’t anything new; the tech has been in development for at least a decade now. Like any emerging technology, yields play a huge factor in terms of economies of scales when it comes to being able to bring them to the consumer marketplace. Only now are such screens being manufactured in sizes that allow them to be utilized in a broad range of applications. This will also include wearable technologies like say a wrist computer (which will mainly be marketed specifically as a watch).
But the display technology is also just one small part of the equation. You need silicon behind it. And that silicon (plus the display), needs to be powered. Even a iPod nano with its embedded processor and firmware, had just around 20 hours of battery life when playing music for that time period. Modern digital watches are basically very simplified devices with a very limited amount of functionality (firmware code) which allows the batteries to last years. Thus one of the biggest challenges with a wearable device like this is managing power.
iOS is generally scalable; Apple has learned a lot over the past 6 years. A wearable device based on it would require stripping parts of it down even more. At this juncture, it isn’t feasible to basically take what exists on an iPod touch or iPhone, and keep the bulk of that functionality intact (i.e. running a full version of iOS). Such a device really needs to be charged maybe once or twice a week at the most. Again, that is challenging if we’re talking about the device also having a communication chip in them (Bluetooth and WiFi are going to be power hungry).
Apple did a remarkable job when it came out with the first iPhone (with each iteration basically pushing the envelope). One can also argue that the competition has also manage to surpass Apple in this very area as well. And it is unsurprising this same competition are also working to try and beat Apple to the punch. Samsung has said they’ve been working for many years on such a device – the problem is that they and many others would really like to see how Apple is going to do this. This area is really Apple’s forte in terms of industrial design and the mechanical/electrical and software engineering to solve such difficult problems. Again though, the above is not simple if we’re talking about how Apple would do it. The issue with all the patent lawsuits and how much of that really hasn’t gone Apple’s way, I highly doubt they will be rushing anything out anytime soon just so the likes of Samsung can have an easier design template to copy from. But these companies also want to get a jump on Apple because it is a PR win when it comes to the innovation mantra.
Which leads me to how all of this plays into why AAPL sagged the way it has over the past few months. The company looks like a has been…. Jim Cramer after all kept saying that the magic is gone because his daughter was telling him that Apple was no longer cool when compared to Samsung. The company looks like it is stuck in a innovation rut as there seems to be nothing with a wow factor. And you know what, superficially this isn’t that far off the truth. But it is all superficial.
In the mean time, there are folks like myself who have seen this same crap play out before in the past (posted ad nauseum previously), only to have all those naysayers proven wrong. I’m not going to deny the company missed the boat on some things; Maps being one of them (it’s getting better but geez, it still needs work), that the iOS UI is getting way long in the tooth, and that the iPhone could expand just a little width wise for added screen real estate. The thing is at least on the hardware side, they didn’t do a Samsung and kept growing the screen year after year…. really, from a smartphone perspective, there really isn’t much more growing that can occur because after awhile, the Newton factor comes into play (one of its main downfalls was its size compared to the much more successful Palm Pilot for example). Folks like myself don’t want something the size of a Galaxy S4 for example.
The iOS platform can either define an entirely new market or revitalize those which are balkanized. Form factor wise, both the smartphone and tablet market are old news already. It’s going to mainly be about refinement. The iPad mini has I’ve noted before, is really what the first iPad should have been, and I really don’t think Apple will be able to top themselves in this area. Because of that, I believe they are already skating elsewhere to try and surpass these two markets. The wearable computing market has the potential for being huge but doing it right isn’t going to be easy.
As in the past (whenever the stock swooned in this manner, and the macro story was still in place), I would accumulate. Such is the case that I’m still doing this, overloading my already overloaded position in the stock. The recent downturn has naturally affected my plans for early retirement since as stated before, 2015 was the timeframe when I was looking to begin unloading some shares at a certain price range. At the current $450 level, I think it will take at least 2 years for the stock to re-hit it’s previous all time high in the absence of any major catalyst (i.e. a product which once again, defines an entirely new market). Because of that, I may now have to push off those plans at least another two years. The one good thing is this stock now pays a dividend…. so I really don’t have a problem with the stock flat lining for awhile since it gives me even more time to pick up shares at these lower levels.
