The trouble with earnings seasons (and there are four of them annually so it seems we’re always in one) is that there are a lot of data points you could talk about, many of which are significant. They’re also often disconnected, making it hard to blog about them without writing a book every day. So if I pick and choose differently than you might…sorry!
Apple has to top everyone’s list, including my own. Apple’s numbers were good but its iPhone sales were lower than expected and there’s a good indication that the company is seeing a shift of sales from premium to value lines. The fact is that nobody should be surprised by this. The PC market has tended to shift to lower-cost units over time too, for example. The challenge for Apple is to prove it also foresaw the change and has done something about it. Just fielding an iPhone 5s or something isn’t the proof point needed, either.
We have smartphones, for the most part, not to wave them around to show our coolness but to use them as a portal for information access and communications. The smartphone grew out of the value of the Internet, proved out in more fixed environments, and the recognition that value would be helpful while mobile. So the gadget was a means to an end, and with all the hype over this or that model or feature or OS or vendor, we tend to lose sight of the fact that this is an on-ramp we’re talking about, not the Highway to the Sun.
To me, the critical point for Apple to address is the fact that just as the Internet changed mobile, mobile is changing the Internet. We have a much more app-driven view of “online” today than we have a page-driven view. You can see that with Windows 8 tiles and Google’s intention to retire iGoogle in favor of an app model. Because developers create apps, and because Apple has a large installed base acquired early in the market cycle, it’s always had the most apps. And if an app is a window on the online world, increasingly a window on the cloud, then Apple could be said to have the most “cloud”. Except of course that it doesn’t.
What’s the difference between a military column and a mob? Organization. What Apple needed, and still needs, to do is to create not only the appliance side of the developer equation but the cloud side. We know from SOA evolution that software is increasingly an orchestration of functional components based on a set of rules/policies. The online experiences of the mobile future, the stuff I’ve been calling “point-of-activity intelligence”, are similarly orchestrations of functional components. The symbiosis among these components is what creates the organization, the community, that makes an organized military formation more powerful than a mob of the same size. Apple, by defining the organizational/orchestration rules that bind their vision of the cloud, could control that symbiosis and profit from it. So could Google, or Microsoft.
Apple TV or Google Glass are examples of the next generation of this same issue. As long as we focus on the instantiation of the capability and not the production of the value, we miss the point. Augmented reality is useful to the extent that you can provide the augmentation. How you do that isn’t important until the utility of the added information can be validated. A new generation of TV that uses the same HDTV screen and shows the same material isn’t going to be much of a revolution, even if we want to believe that streaming it versus linear RF is revolutionary. The value will come in how we can personalize it, socialize it, integrate it with the rest of our lives. And this isn’t a Glass or TV problem, it’s a cloud problem.
To me the most significant thing going on right now in the appliance space is Google Glass. First, it creates a whole new concept of “online”. Virtual reality used to be a choice versus “real” reality. With Glass the two are blended into a single visual experience. That opens a host of applications that we’ve never been able to deliver. It doesn’t create them, though. The real importance of Glass is that it’s impossible to realize the value of Glass without creating the value in the cloud. The collection of real-time information, the merging of that information with knowledge and policy, will be what makes augmented reality distinctively different and more useful. Google’s asset in Glass is, in no small part, the fact that it forces Google to look at the mechanics of point-of-activity intelligence. Apple COULD look, but nothing is forcing it to, and for Apple-watchers, an indication that they’re looking at the experience now and not just the appliance is the critical signpost for success.