Commentary

Finding A Winning Combination

This week, Apple held a big event in San Francisco. They made several product announcements, ranging from introducing the iPhone 6s with a faster processor, a 12-megapixel camera that shoots 4K video, the iPad Pro with a whopping 12.9-inch screen and a stylus aptly called Apple Pencil. They also introduced a much-anticipated updated version of AppleTV. Usually, I would talk about the great new studio or network TV deals announced at the event. Not this time. 

A big part of the AppleTV announcement was focused on bringing some of their 1.2 million iOS apps to the big screen. During the introduction of the apps feature, Tim Cook, Apple’s CEO said, “We believe the future of TV is apps.” While I agree that apps will play a key role in the future of TV, I think they are just part of a larger, evolving story. The underlying story that caught my attention is how Apple is combining technologies across devices, especially on AppleTV. For example, Siri, Apple’s intelligent assistant that responds to your voice commands, is now a built-in feature. Apple also updated the AppleTV remote, which now includes a multitouch surface and a wrist strap. All of these are great features and, more importantly, they are technologies we are already used to using from our smartphones, tablets and video games. Apple is smart to try multiple combinations of existing technologies across devices. Here’s why.

We saw features such as multitouch and apps move from the iPhone into the iPad, eventually into iPods and even into the Macintosh OS. Do you see a theme? By recombining technologies across their entire product line, they dramatically increased the consumer’s ability to learn and adopt new products. Making the leap from the iPhone to the iPad was simple because consumer’s understood apps, swipes and the world of multitouch. Including apps in the new AppleTV will now be another simple progression for consumer’s to make. What’s telling and what I believe will be disruptive, is what this this particular recombining combination of a remote and apps means for the evolution of the family room experience, especially when it comes to gaming. I’m sure the big manufacturers of gaming consoles also took note, since this combination is likely to be disruptive to their business. 

While console games are still a dominant force for first person action games and sports games, which require intense processor power, the fastest growing of gaming is casual gaming. The games we play mindlessly on your mobile devices and tablets, matching colored dots, or bits of candy. Casual gaming is expected to become a $100 billion business by 2017. By simply combining existing technologies such as multitouch and a remote, along with apps, Apple easily becomes a significant player in the casual gaming space – moving from selling the apps in their app store to selling devices (AppleTV) into our living rooms. And buying a second remote for gameplay on AppleTV will become an easy decision for consumers. It will also make a great addition to Apple’s growing and highly profitable accessories business. This combination could also be a winning one for app developers that may see growth in time spent in their games, which could lead to higher advertising revenue and more opportunities for brands to evolve their gaming sponsorships. 

Lastly, the combination of Siri with AppleTV, brings the intelligent assistant into the living room and into an “always on” mode. It will be a lot easier to use Siri as a general purpose tool. Apple isn’t alone in this space. Amazon has been aggressively marketing their “Echo” device, highlighting it as “always ready, connected and fast”. While Echo is cool, it’s not aimed at the living rooms nor is it connected to a big screen, games and millions of apps, which limits it to somewhat of a novelty vs. a general purpose tool in the family room.

The unspoken combination that Apple has made is that of services and a platform. As we will see with the AppleTV combination, Apple is one more step closer to becoming an indispensable part of our daily lives, a new wave of general purpose technologies we can’t live without, such as plumbing and electricity. We can’t live without those. And who among us can live without apps and connectivity?

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