Apple gets ready to open the next frontier

With hints from the IT giant about a new product, Dan Buckley speculates as to whether it’ll be a bigger iPhone, a wearable device or a payments system for e-commerce transactions

Apple corporation likes nothing better than a good tease, usually made during one of its grand, defining moments or timed with a special anniversary.

It is now all of 30 years since founder Steve Jobs unveiled the iconic Apple Mac. Trumpeting that success on its website, Apple reminds us that it “was designed to be so easy to use that people could actually use it”.

That sounds blindingly obvious nowadays, but back in 1984 personal computing wasn’t very personal. It was largely confined to an elite of academics and wealthy businesses.

The Macintosh 128K was the first mass-market personal computer to break the mould. It was also the first to feature a graphical user interface and mouse.

“It came with a promise — that the power of technology taken from a few and put in the hands of everyone, could change the world,” says Apple. “That promise has been kept. Today we create, connect, share, and learn in ways that were unimaginable 30 years ago.”

The hint is that Apple has something big up its sleeve that will keep the coffers flowing for the next few decades.

It will need it, if a flagging share price and Wall Street jitters are anything to go by. Although it is awash with cash — €142bn and rising — expectations among investors are so high that Apple cannot be seen to flounder, even for an instant.

Financial traders are more concerned about what Apple will do over the next few months than what they are planning in the years and decades ahead.

This year was to be Apple’s watershed in China, when a long-awaited deal to sell iPhone through China Mobile Ltd, the nation’s largest carrier, would claw back ground from rival Samsung.

Lower-than-expected pre-Christmas iPhone sales and a weak revenue forecast renewed fears about Chinese demand and a tepid global market, wiping 8% off Apple’s share price. The company also warned that revenues may fall in the first quarter of 2014. Apple has not posted a drop in quarterly revenues in more than a decade.

Since then, it has been buoyed by sales of the iPhone and iPad but this year a sense of urgency is growing, with trouble brewing on all sides.

Intense competition in China from Samsung as well as from local rivals like Huawei and Xiaomi is impeding its progress there.

“There’s no doubt that shipments (to China Mobile) are lower than almost anybody expected,” Pacific Crest Securities’ Andy Hargreaves told Reuters. Globally, “the high-end smartphone and tablet markets are saturated, and that’s not going to grow.”

There is a sense of back-to-the-future about all this. In 1995, the company was in trouble with sales of Macs dwindling and other manufacturers making cheaper and smarter products. It had to come up with something new. The funky iMac G3 did the trick and in 1998 Apple was posting profits again for the first time in three years.

The iPod followed in 2001 and the iPhone six years later, with the iPad in 2010 consolidating Apple’s position as the world’s most valuable technology company.

But investors are still not happy. The company forecast sales of to $44bn in the first quarter of this year, but Wall Street had expected even more — $46bn, on average.

So, will a new product do the business once again? There is a range of possibilities:

A bigger iPhone

This would be the least radical option but it may be the chosen one if Apple wants to outmanoeuvre its rivals in China where bigger screens are favoured and consumers see the iPhone as puny compared to popular alternatives from Samsung, LG and Sony.

Last week, the Wall Street Journal reported that Apple was working on a bigger iPhone, sparking a frenzy of online chatter. The consensus is that Apple is putting a phone prototype with a 4.9-inch screen through its paces for the launch of the iPhone 6. Apple, predictably, is saying nothing.

E-commerce revolution

With the success of payment systems like Paypal and the emergence of Bitcoin, the opportunities in e-commerce are obvious. Since last summer Apple has been pitching retailers a system called iBeacons that detects when an iPhone is nearby and can trigger special offers from their apps. Combined with the iPhone 5s’s Touch ID fingerprint reader, iBeacons could create a new payment system.

Apple CEO Tim Cook dropped an unusually strong hint when he said mobile payments were an idea that intrigued the company. “You can tell by looking at the demographics of our customers and the amount of commerce that goes through iOS devices… that it’s a big opportunity on the platform,” he told investors. You can already use iBeacon to buy products in Apple stores, and analysts point out that this technology has the potential to do much more.

Smart sleeve

The question is: will it be a watch, a hearing aid or a pair of glasses? The answer: perhaps, all three.

Apple is believed to be testing prototypes of a variety of wearable devices.

“I think the wrist in interesting,” Tim Cook declared cryptically at a tech conference last May, describing wearables as “a very key branch of the tree”.

Strangely, he appeared to dismiss any grand future for eye-wear technology like Google Glass, the wearable computer with an optical head-mounted display that is being developed by Google.

TV’s future vision

Hopes of innovation in Apple’s TV business have been frustrated by licensing difficulties, according to analyst Tim [url=Tag: danbuckley[webhead] http://www.ft.com/intl/cms/s/2/3b1a0038-87e2-11e3-8afa-00144feab7de.html#axzz2rthHGsmP]Bradshaw, [/url] the company is looking at other innovations for the ‘smart home’. Yet there are other innovations Apple could conjure with a living-room device.

“Apple’s low-key introduction last year of certified peripherals that turn the iPhone into a games controller suggests the TV box could become a fully fledged video-gaming console, and the company could finally open Apple TV to external app creators.”

If Apple’s latest acquisition is anything to go by, its new gadget could involve a 3D sensor that matches body movements. Apple has snapped up PrimeSense, an Israel-based start-up that specialises in 3D-sensor technology of the kind that powers Microsoft’s Xbox Kinect gaming device.

Kinect responds to how you move any part of your body so, instead of pressing buttons on a keypad, gamers use their full body to play.

The plan might be to outsmart Samsung’s latest Smart TV which already allows users to control their sets using voice — and motion — technology.


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