07 Oct 2016

Why Apple Is Searching For A New Reality

Apple chief Tim Cook has a utopian vision. He’s dreaming of a world where people in developed countries, and eventually the rest of the world, have augmented reality experiences every day. Although he admits this will “take a while” because of technical challenges, he sees a future where AR is “almost like eating three meals a day”.

 Looking to the future is very much part of the job as leader of the world’s most successful technology company. It’s also much more comfortable than focusing on the present, where Apple has spent much of this year embroiled in an uncomfortable and very public discussion of its tax affairs.

Of even greater concern, iPhone sales are on the skids. Putting aside the incredible achievement of increasing demand for a whole decade, there’s no getting away from the fact that Apple revenue fell for consecutive quarters this year. Everybody expected the iPhone 7 launch to put this worrying trend to bed but then Apple announced it wouldn’t release initial sales figures for its new flagship device.

That looked like a strange move for a company that loves basking in the limelight of consumer adulation. Apple’s PR said it wouldn’t report the numbers because the device would sell out so sales were governed by supply and not demand. Yet this has been true for years, so why now? If we were being cynical, (Ed’s note: We’re always being cynical) we’d suggest early sales are failing to live up to the hype.

Cook and his senior management team have long been aware that they couldn’t keep growing smartphone sales forever. But they’ll still be alarmed by the idea that we’ve reached and passed the point of Peak iPhone. They were hoping Apple Watch would pick up the slack but, geeks and fanboys aside, these devices have failed to capture the imagination.

Set against this background, Apple is desperate for a new way to continue its growth trajectory. Shareholders would happily accept augmented, virtual or any other alternative reality but pinning your hopes on immature technologies is a dangerous game to play.



Another One Bites The Dust

Much to nobody’s surprise, Presto became the latest casualty in Australia’s video streaming wars this week. With a name that sounds like an amateur magician who does kids’ parties at the weekend, it feels fitting that its final trick is to disappear with little or no fanfare. Presto customers will be migrated to Foxtel’s revamped Play service. Given a recent rebound in its pay TV subscribers, Foxtel is likely to promote streaming with as much enthusiasm as newspaper bosses tasked with switching their titles to an online model.

With news also filtering through this week that Quickflix has been sold to a US-based holding company for peanuts, we’re left with a David and Goliath video streaming battle that pits global market leader Netflix against local player Stan. There’s likely enough room for both to make hay while the sun shines but with Amazon, Apple and Google looming into view, we wouldn’t like to take a bet on the long-term success of either business.

Stan only has 332,000 subscriptions, according to the latest Roy Morgan research, while Netflix is struggling to translate its US success into a global story. It’s investing more in original content, which in turn has led to increased prices that have slowed subscription growth. Investors are getting anxious. Streaming will be a key battleground in the entertainment industry over the next few years but don’t expect market disruptors to win.

Physician, Heal Thyself

In the world of enterprise technology, IBM Australia has been part of a global drive to commercialise the cognitive muscle of its artificial intelligence supercomputer, Watson. Big Blue has spent the past couple of years trying to build potential applications and use cases to fire the imagination of potential customers.

From a communications perspective, Watson has been a marketer’s dream ever since it burst into the headlines by beating human champions in a popular quiz show five years ago. Since then there’s been a steady stream of coverage detailing its involvement in everything from improving healthcare outcomes and transforming business operations to catwalks and cooking tips.

But whether all of this attention translates into significant dollars remains unclear. In a blog post last month, long-time IBM critic Robert X Cringely claimed Watson is well off the pace in terms of commercialisation. With IBM’s revenue falling for 17 straight quarters, fixing its ongoing problems is a challenge worthy of any supercomputer.

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