Quick Thoughts on the 2017 WWDC Keynote

  1. HomePod illustrates very clearly how Apple thinks differently from the rest of Silicon Valley. Here, Apple is going after a market that exists and a need that has been explicitly sought after by consumers. Apple is simply providing a significantly better solution to this market. This is similar to how the iPod entered a market already built and served by the Sony Walkman, and is similar to how the iPhone entered one already built by Nokia and Blackberry. This is in contrast to Amazon and Google who are trying to create a new market. The market adoption dynamics will be very different.
  2. Safari’s tracker blocking solution is interesting and will protect users privacy. Importantly, customers have noticed and have been worried about the spooky retargeting ads, and by providing a remedy for this, Apple will position itself well. Equally important however is that this will not significantly change the dynamics of the advertising market. My position is that targeting itself has not significantly contributed to the shift to digital marketing, and only to the relative market share among the digital advertising networks and Google/Facebook. The real driver of ad spend is still eyeballs and has been this way for decades. Neither ad blocking nor tracker blocking will change this. My prediction remains unchanged that Google will continue strong growth for the next few years, but will drop to single digit growth around 2020 due to saturation of the digital advertising market as a whole and competition from Facebook.
  3. The iOS 11 improvements for the iPad are hugely significant, especially in combination with the work that Apple has been doing with IBM and other corporate IT vendors/consultants. Although there still likely remain obstacles that will not make the iPad a true replacement for laptops, the improvements are large enough to encourage many people to give the iPad a second look as a work machine. We can safely predict an uptick of iPad revenue going into the later half of 2017.
  • obarthelemy

    Long time no see, I miss our discussions now that techpinions is paywalled (Is there’s anybody left to call them out on “Windows doesn’t have cut and paste shortcuts” et al ?)

    I’m, obviously, seeing things a bit differently:

    1- Siri is weak compared to the other assistants, but Apple needs product so their (very trends-conscious) customers aren’t left w/o a toy that checks the “intelligent speaker” box. Here comes the homepod, dutifully locked in to Apple services. Nobody but iUsers will want it, but at those prices if 20% of iUsers get it, Apple will be making a killing. Plus, it won’t work with anything non-i so more lock-in, which is Apple’ overriding goal.

    2- Apple is taking over the user relationship/ID management. That’s exactly why Google launched Android, so Apple and MS couldn’t cut it off. Apple collects as much data about its users as anybody else, only that data is supposed to be anonymized at some point. That commitment only commits users who a) believe in Apple’s technical expertise b) believe in Apple’s commitment and PR (ie, “we’ll keep building servers” (until next year), “designed for your hand” (until we too can make a phablet), “we’re committed to the Pro market” (so use that trashcan for the next 4 years) ).

    3- The main info is that prices are going up (let alone the differential with “good enough” alternatives), the whole hardware, software and cloud setup is more closed than ever. Apple is milking its hapless users like crazy.

    • Yes, I miss them too.

      If I’m not mistaken, the Amazon Echo is still only on sale in the US and the UK. Sales are still only in the few millions. It’s very very early, and I believe that the people who proclaim that it’s the next big thing are mostly those that live inside the Silicon Valley tech bubble. I do not think that at this early and unproven stage, Apple has to follow Amazon’s lead and create a product that ticks the “intelligent speaker” box. At this point, this approach has yet not moved sales beyond a few million. If anything, I would have expected Apple to take a different approach to cracking open this opportunity. This is indeed what Apple has announced at the WWDC, and I believe that this is by far the better move.

      As to whether Apple will truly respect your privacy, I doubt that any amount of discussion will make you change your idea unless there is some kind of official audit mechanism in place. This is not my argument. What I wish to point out is that whatever Apple does, we are unlikely to see any impact to the financials of Facebook or Google. My understanding is that targeting is not why advertisers spend money on digital advertising in the first place, and therefore the lack of it will not make any detectable difference. My belief is that companies spend money on digital advertising simply because that is where the eyeballs are, and not because of targeting. From a financial point of view, targeting or the lack of it is insignificant.

      And regarding the third point, what I’m predicting is a turnaround. Apple has milked its user base for ages and I don’t see that changing. This is not what I’m talking about. What I want to stress is that combined with other longer term efforts, we are likely to see an increase in iPad revenue in contrast to the declines that we have been seeing for a few years now. We are likely to see a significant change in how the iPad is perceived and how well it sells.

  • obarthelemy

    This is off-topic, but what I’ve been wondering most about recently is: once smart cars drive down the cost of car trips, what advertising + tracking load will we be willing to accept in exchange for free trips ? I got a hunch his might happen, and is probably a Good Thing if it unlocks car rides for the young/poor/old.

    • It would be interesting if that happened in real life. However, I think you need to look at the economics.

      Let’s think about a 30min ride. Currently in Japan, I think that would be about 20-30 USD. If we’re lucky, self driving tech might bring the price down to 4 USD, the price of a train for
      a similar distance. Next, contemplate whether it is possible to earn more than the cost of the ride (4 USD) within the 30 minutes while the customer is in the cab by advertising and data tracking alone. Keep in mind that the customer will probably be spending most of his time staring into their smartphone instead of paying attention to any ads that may show up in cab itself.

      Comscore back a while ago mentioned that the average cost per thousand impressions (CPM) for digital ads is about 2.5 USD. Assuming that an ad in a cab would have similar costs, you would need to show the poor passenger more than a thousand ads during their 30 minute ride to be able to pay for their ride. Tracking may add some additional money, but I doubt that it would be dramatic.

      What is often missed is that advertising needs a huge amount of eyeballs to earn even small sums of money. Even with dramatically lower costs, ads probably won’t pay for it in whole.

      http://www.comscore.com/Insights/Press-Releases/2010/5/Americans-Received-1-Trillion-Display-Ads-in-Q1-2010-as-Online-Advertising-Market-Rebounds-from-2009-Recession

      • obarthelemy

        This assumes
        1- only 1 traveler,
        2- that the value of brains+eyeballs at home (free to roam and engage in whatever) is no lower than the value of eyeballs+brains locked in a metal tin, watched closely, with fewer distractions.
        3- At the more direct level, what about “hey, your nephew’s birthday coming up and you’ve been looking up gaming consoles, Sony will be glad to offer you this ride if you get him a PSP or PS4 with these nice promos: … ” that’s very uncouth and creepy, but I trust you get the gist, I’m sure marketers will be slightly more subtle ;-p

        • Ads in taxis are not new. In Japan, it’s 10 USD per month per cab to put an ad in front of the passenger’s face (on the back of the front headrest). If you can do 10 rides per day, 20 days a month, that’s 5 cents per ride.

          Targeting on the Internet has failed to resurrect banner ads. Although the sophistication of targeting has improved (at least purportedly), that market isn’t growing. Facebook’s inline ads and Google’s search and YouTube ads dominate. It’s a huge stretch to assume that improved targeting would increase the value of an ad to the amount necessary to pay for a ride.

          And as I mentioned before, your passengers’ eyes will probably be glued to their smartphone screens anyway.

          • obarthelemy

            Maybe you re right, but this may have the possibility of an inflexion point – paradigm shift: trips are becoming one tenth as expensive as they used to be; they re reaching parking prices, that shops are happy to validate and pay for.
            This might even impact ecommerce: we ll drive you there, we ll entertain you and give you goodies on the way…

            PS sorry, my iBrother s PC has a misconfigured Canadian keyboard, the apostrophe is… i dont know where, not where its keycap says it should be ;-p

          • I agree that the shops paying for the ride makes sense. Bringing customers physically to the store is much more likely to result in a purchase rather than just showing them ads, and the passengers have already commited to spending time inside the store.

            One thesis that I want to elaborate on more in the future, is that advertising (whilst big) is not large enough to subsidise all the cool things that tech can potentially create. I agree that travel could be subsidised more than it is today, but it probably won’t be advertising that pays the bills.