Quick Thoughts: Apple’s WWDC – More Ponies Than Dogs

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–          As expected, Apple has integrated new functions into iOS6, including its own Maps technology, squeezing Google and other 3rd party apps in the process.

–          New MacBook Airs and Pros up the ante for future Windows8 ultra books, raising specs all around while getting even thinner.

–          Not a peep on the oft rumored iTV – developers need APIs to build apps.  Time is short to ink content deals, secure CDN capacity and build a library of apps, so maybe not this year.

–          Enhancements to last year’s big intro, iCloud, were minor, leaving it undistinguished from the pack.  It remains a weak point for a company with very few of them.

 

Another June, another Apple World Wide Developer’s Conference.  Of course, the WWDC long ago ceased being primarily about software developers and the usual throng of live bloggers and fanboys descended on the Moscone Center in San Francisco today for the eagerly anticipated keynote.  Despite Apple’s vaunted secrecy, most of the goodies presented had been widely anticipated by the assembled masses and CEO Tim Cook, in his first WWDC at the head of the company, did not pull out the venerable “One More Thing” routine made famous by his predecessor.

The big news at the WWDC was iOS6, expected to power the next iPhone anticipated for the fall.  Siri is getting some new tricks – knowledge of new subjects, support for new languages, and deals with major auto makers to put a Siri button on their steering wheels.  The big deal is Apple’s new mapping application, built on top of the recently acquired C3.  Using aerial photographs, Apple can render detailed 3D maps with more precision than satellite cameras.  Apple plans to offer crowd sourced traffic information, free turn-by-turn navigation and location information provided by Yelp and OpenTable once iOS6 is released, opening opportunities for local advertising revenues while freeing the iPhone from a major element of dependence on arch rival Google.

Of course, once Apple acquired C3 and its spy plane derived technology, it was only a matter of time before Google was pushed to the curb, and if Apple could quit Google search without turning to the equally odious Microsoft for Bing, it would do that too.  Of course, Google is not interested in supporting iTunes, iBooks, or iAnything, either.  This is one of the big weapons that the major platform holders wield – identifying value added applications and integrating their own solutions directly into their own software, thus killing the market for 3rd party players and taking the spoils for themselves.  This dynamic shows the value of owning a platform like iOS, Android or Windows Phone/8, and the risks to the web-based businesses that must defend against the power of the platform. We recently wrote that the defining factor in the changing web paradigm is platform control.

Against this backdrop, Google’s decision to push for maximum Android penetration was prescient.  I expect some will ding Google on this for the loss of opportunity on the iOS platform, but that inevitable loss is more than offset by the opportunities that it has gained with the enormous global adoption of Android.  Meanwhile, Apple is taking appropriate advantage of its dominant position on its own home field.  I expect more of the same from future iOS releases.  Apple will be selling a lot of iPhones and iPads in the future, and there is a lot of value to that beyond the price of the devices.

The rest of the WWDC announcements were fairly mundane.  New MacBook Air and MacBook Pro models are thinner and more powerful than last year’s models, and the high end MacBook Pro now sports Apple’s trademarked Retina display.  All of this sets the bar higher for the phalanx of Windows8-based ultrabooks due in 4Q, but Apple’s premium pricing and modest market share position make these announcements less than ground breaking.

More important were announcements that were not made.  Apple offered no hint to the conspiracy theorists on the hunt for the missing iTV set.  Being that the WWDC is, ostensibly, a gathering of Apple’s development community, I would think that offering an API for these developers to begin working on applications suited to a TV product would be a necessary precursor to delivering such a product to market.  I also would think that an Apple streaming video product would generate enough traffic that the company would need to take steps to secure ample capacity on a national content delivery network well before subscribers begin streaming video.  Finally, I also suspect that Apple would need to negotiate content deals giving it access to the popular programming that its customers would want to watch.  If Apple really intends to bring a differentiated TV product to market by year end, time is growing very short.

A last comment on iCloud, last year’s big announcement but an afterthought during today’s presentation.  While Apple announced that 125M users have registered for iCloud, there has been no comment on the percentage of those that are actively using it, and I suspect that number is fairly low.  The blogosphere is rife with accounts of iCloud frustration – difficult to set up and molasses slow to use.  Apple has done little to promote it and has said nothing to suggest that they are working to resolve the points of frustration.  I suspect that iCloud performance is hindered by the same lack of CDN capability that may hold up streaming video.  I also note that cloud services and data center design are quite far out of Apple’s traditional sweet spot.  Whatever the reason for its unimpressive performance, I see iCloud as very important to Apple’s ability to fully exploit its platform position.  I hope they figure this out by the next WWDC.

Relevant research includes: The Internet Revolution: It’s Not Social OR Mobile, It’s Apps (5/15/2012)The Four Horsemen of the Internet (12/16/2011); and Internet Everything: The Coming War for the Consumer (4/21/2011)

For our full research notes, please visit our published research site.

 

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