Last night saw one of the longest keynote announcements from Apple. At over 2-hours, it packed in updates to all their major product categories except computers. John Gruber has a nice summary of the event that you should read.
I wanted to share a couple of observations:
New iPad
When the original iPad was unveiled in 2010, I wrote that this was a computing device for the GAAKS - Grandparents, Aunties, Average J at work, Kids and Students. Over the years, the iPad evolved into a highly capable computer, replacing the use of a PC for many. But for some segments, it was still a media/reader accessory to the traditional laptops. While the iPad offered the great advantage of touch and easy access, it lacked some of the features that power users normally sought. In the business world, it's surely the physical keyboard. In some of the creative fields, perhaps the ability to have precision inputs. The size of the screen and the tablet's computing power were also "weaknesses", for many.
Apple has now made a major push into the enterprise, through partnerships with IBM and Cisco. So it was but natural that iPad would evolve into a device targeted at professionals. The iPad Pro appears to address the "shortcomings" of the previous iPads with its larger screen (13") and a processor that is superior to that of most PCs! More interesting were the two input accessories that were launched - the Smart keyboard and the Pencil. One would need to experience them before getting to a verdict but the videos and demos were superb.
There had been demands that Apple make MacBooks (laptops) or iMacs (desktops) with touch screens and they refused to move in that direction, even though several other hybrid PCs were out there in the market. "And, of course, over the years we've experimented with all the technology, but we found it just wasn't good. ... We're not all that interested in building one,"
said Craig Federighi, Apple SVP of Software Engineering. So what they did was to take a device that was great in the touch interface and added computing power and accessories to enable the power users.
Of course, it does leave a question around the laptop market. Apple has never shied away from cannibalizing its own products and I am intrigued about the impact the iPad Pro will have on the Apple laptop family, in particular, Macbook (12" - newly introduced) and Macbook Air (11" & 13" - most popular for regular use).
iPhone Upgrade Program
As expected new iPhones were launched and even though it was the year for incremental improvements ("S" series), there were many interesting changes. The 3D Touch adds a new dimension to the interface and while it hasn't been a major factor in (my) Apple Watch experience, I can imagine that the iPhone would benefit from it. The camera, as usual, got a huge bump and reinforces the fact that today, the best camera for most (>95%) people is in their pocket.
What I found most interesting, however, was a new retail scheme that Apple announced (initially USA only). The iPhone models, since inception, have been defined by the carrier(s) - AT&T version, Verizon version, etc. and the pricing announcements are for subsidized contracts (starting $199). Many of the US carriers are
now moving towards reducing / ending phone subsidies with the introduction of installment schemes. Apple announced its own monthly payment plan but with a wonderful twist.
(This is my understanding of how the scheme works -- will update as I learn more about it.)
A customer can buy an unlocked iPhone on a 24-month installment plan. At the end of 12 months, when the next iPhone is launched, s/he can upgrade to the latest one, without any additional cost - just extend the installment period by an additional 12 months.
The 16GB phone with the extended warranty costs $700 (incl. taxes); say, the average customer upgrades every two years. The resale value of a 2-year old iPhone would be
about $150. So, the net cost is $550 for using an iPhone for 2 years.
The monthly installment is $32.41 (about 20 months to recover the upfront cost). Over a similar two year period, the customer spends $778, but has the advantage / benefit of getting the latest phone every year.
So, the customer gets a new iPhone every year at a cost of $389 vs. having to pay $550 (net) for a phone every two years. On the other hand, for those who like to upgrade every year (ahem!), the net cost is $380 after getting
a $320 trade-in for a year-old phone. For them the Upgrade program makes great sense because they don't need to pay upfront nor do they need to take the risk / effort of getting a poor resale value in future.
There are two major benefits for Apple, though, if many customers opt for this program:
1. Far more customers will be on the current hardware cycle, thus making the iOS updates / Apps more efficient;
2. This is a strong lock-in... at the end of 2-years, the customer may or may not upgrade to the latest iPhone or could switch elsewhere. But, with this rolling installment scheme, it is very likely that a customer would take the latest iPhone every 12 months because it does not have any additional cost - just 12 more months of commitment. The rolling subscription plan could be a great lock-in mechanism.
The next few months will be busy: the new iPhones are out in September, the Apple TV in October and the iPad Pro in November. I will share more observations as I get hold of some/all of them and have first-hand experiences to share :-)