Apple: New Allies, Enemies and Magic
So let’s take a look at the new battle lines being drawn specifically with the introduction of ApplePay, AppleWatch, and a focus on health and
fitness. As Apple has successfully done in the past, its new products and core software enable a whole new group of developers to dream of how to reach several hundred million iPhone users around the globe, quickly. Just as the App Store brought a new generation of ground-up and established developers to the mobile world, the HealthKit opens the door for some very heavy hitters to align with Apple. Medical equipment manufacturers including General Electric and Siemens, pharmaceutical companies like Johnson & Johnson and Merck, and physicians of all kinds can start rolling out services to solve issues they have long faced. Post-operative patient monitoring, daily drug regimens, and vascular health improvements just became a whole lot more in the grasp of health care providers. If the AppleWatch gains traction over time, this only furthers the potential creativity in terms of services that these and many other deep-pocketed companies can deploy.
The Brave New World of Mobile Payment
While Health may be a peaceful and serene state for now, the areas of payment and wearable-smart-devices are wars of different degrees. Mobile payment solutions have been kicked around for well over a decade already, starting with what were referred to as “micro-payments,” via premium (fee to consumer for) text messaging. The biggest winners in the early days were sellers of ringtones, wallpapers, and entry into contests—whose organizers were subsequently and constantly sued, to the point that the practice was discontinued in the U.S. almost entirely. The next wave came with the introduction of the iPhone in 2007. Now mobile couponing and payment were going to be real, so pundits said. However, the challenge was, and continues to be to this day, the retailers’ point-of-sale (POS) systems that were relics from the 1970’s. As no data or processing company was willing to step up with billions of dollars in free, new equipment to replace the dinosaurs, this process remained very slow to evolve.
This did not stop the wireless carriers from forming their unfortunately named coalition called, “Isis”—since re-named “Softcard”—to develop a ubiquitous mobile payment solution. (Incidentally, the carriers missed their chance to be the biggest winners in mobile payments, as they had control of their subsidized consumer devices and monthly bills, all due to risk aversion, but that is a whole other story.) Google continued to try to push out their Wallet service, to minimal success. And “Near Field Communications” (NFC) chips were to be the conduit to do it all. That is until the company with 40%+ of the U.S. smartphone market, Apple, said in 2012 that, “it’s not clear that NFC is the solution to any current problem.” They put their money where their mouth was, as the iPhone 5 was engineered in such a way that an NFC chip would not have even worked in the device.
So, experimentation in that same landscape continued, with Visa, Mastercard, Paypal and Square chipping away at monumental challenge. Enter Apple, September 2014. The ApplePay service changes the ecosystem itself, instead of trying to just fit inside of it. The combination of its secure chipset, fingerprint “Touch ID,” NFC integration, and most importantly, a roster of retailers where consumers can use the service, is a first step that will force the other companies to adapt to Apple’s new game. Apple chose to remedy the prior NFC challenge by bringing POS-readers to a slew of promoted, insider-retailer-partners themselves, as well as commandeering the efforts of others. Further, in light of the breaches in retailers’ credit card security over the past year, a solution based in security with a significant potential user base has obvious appeal to help mitigate risk.
Expanding the service to also encompass secure online payments could provide one solution to multiple issues, and hopefully can stop the debate as to what mCommerce really means. No one likes change, especially companies with hundreds of millions of dollars in spent R&D that could now be construed as wasted. These companies may continue to smile to Apple’s face, and talk about partnering, but they are cursing them behind closed doors.
While there are still inevitable challenges to be worked through—such as what happens when your phone goes dead—ApplePay is an audacious, ambitious creation of a new ecosystem. Better, what it ultimately does is keep Apple in their primary business, selling hardware, as the service only works on Apple devices.
The Easy Pickings of the Watch Industry
As they fight the World War on payments, Apple just took control of the battle in so-called “wearables,” starting with watches. This is an area that has still not gotten much consumer traction, despite media attention. The entire smartwatch category will sell a total of only 4 million units in 2014, according to research firm IDC. The most noteworthy event was the debut of the kickstarter-backed, “Pebble”. Even as manufacturers like Samsung, Motorola, Sony and even Swatch have or are developing their own options, it points out an area of sheer opportunity.
The wristwatch’s existence began in the late 16th century, and was a staple accessory for the four centuries that followed it. It was an industry in and of itself, and reached into the world of jewelry as well. Then came along the mobile phone of the late 1990’s. As phones got cheaper and found their ways into consumer’s pockets at mass, the clock on the little displays did a pretty good job of delivering the time. Bottom line, people were wearing progressively fewer watches, especially as smartphones could supply all kinds of time-related services that watches could not. This put the future of this industry in total jeopardy.
Instead of destroying this area outright, new technology companies took the opportunity to re-think the world of watches. While many Android-based manufacturers debuted their wares, the AppleWatch may jump to the front of this category, because it is a very small leap. Of course, they did it the same way they have with their other new category introductions: elegant device design, third party app developer potential, and lots of buzz. Only time will tell if the watch will rise again.
Just as with their past conferences, the Apple devices and services received positive and negative reactions around the globe. But Tim Cook saved a bit of vintage Apple magic for last. They opted to not just give away a non-foreshadowed U2 album. Instead, they immediately pushed it out to over 500million iTunes users. iPhone users just found the new album sitting in their Music libraries. And while the average user can never appreciate the degree of how hard that feat was to accomplish, ta-da. There was their big finale, before smiling and saying “let’s get ready to rumble.”
Jordan Greene is Principal/Mobile Media at Mella Media. Follow him on twiitter @GreeneMarket
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