Apple: Ten Years Forward
by Jean-Louis Gassée
With Apple Silicon, Apple has successfully completed a major transition. We now turn to the next ten-year horizon, to opportunities that may help the company replicate the growth it has enjoyed over the past decade.
In Monday Note articles last month, we looked at the Plus and Minus of Tim Cook’s ten years as Apple CEO. It’s now time to indulge in a modicum of conjecture — not forecast — regarding what the next ten years may hold for the Cupertino company.
One question comes to the fore: Who will be Cook’s successor? He’ll be 61 this Monday (Happy Birthday, Tim!). From my 77 years-old perspective, he could very well serve another decade, but let’s assume that after a 23-year run at Apple, Cook might want to step back and take more time to enjoy the relatively modest $10M estate he recently bought in Southern California.
As a well-run company with a strong and compact Board of Directors, Apple surely has a succession strategy at the ready should circumstances demand. And by the same rules they keep their plans to themselves, as they should. However, we’re free to look at the Apple Leadership page and wonder which of the senior VPs will get the nod. I won’t survey the roster other than to point out a name that’s often mentioned.
Jeff Williams, Apple’s well-liked Chief Operating Officer is, in effect, Tim Cook’s Tim Cook. Williams plays much the same role (and holds the same title) that Cook played when Cook succeeded Steve Jobs. Yes, Williams is only two years younger than Cook…but you already know what I think of age restrictions.
But whether or not I have a soft spot for this or that senior leader matters less than my conviction that Apple’s next CEO will be an insider. In its current situation, Apple doesn’t need “adult supervision”. The Tim Cook Way might be unique, with his almost superhuman focus, but the anointed insider will surely be able to perform the feat of imprinting his or her own style without disrupting the culture.
Let’s look at a few metrics that Cook and the culture that he encouraged have wrought over the past ten years: Revenue (Sales) went from a little above $100B to just below $300 B ($297B to be exact) for the Fiscal Year just ended. In that time, AAPL share price rose from $14/share to more than $140.
Can the next ten years bring the same growth? We know trees don’t grow to the sky; one day lightning strikes, or a fungus starts the rot. But no one, save Warren Buffett, perhaps, was betting on Apple’s trajectory over the last ten years. So why not another growth spurt?
The real question, here, is: Growth in what market?
We’ll dismiss cars right away. To be sure, a few million Apple Cars at $50K would make the auto industry another mother lode for Apple, but I don’t believe it will happen. Apple is a high margin company and the car business yields low margins. If Apple were to bring out the first self-driving car, then maybe…but Autopilot technology is stuck at Level 2 without realistic hopes of reaching Level 5 — real autonomy — in the foreseeable future. Furthermore, while Apple’s software helped the iPhone kill many of its competitors, a similar strategy won’t be possible against the hardware/software vertical integration that’s crucial to Tesla and that we now see in entrants such as Lucid. Perhaps, instead of a “proper” car with four doors, four wheels, Apple will unleash a “micromobile”. Horace Dediu thinks that’s what Steve Jobs would have dictated, but doubts Apple would decide to play in that segment.
Augmented Realty (AR) is often cited as having the potential to change the tech industry and beyond. It’s a more realistic idea than cars, but while there’s much talk about virtualizing our world, while Facebook pushes the Metaverse (and changes its name to Meta for a number of unrelated reasons), AR has no broad use case that Apple could seize upon to launch a new wave of growth.
When I first saw a Blackberry I knew I wanted one, and I was part of a multitude. RIM, Nokia, and others obligingly plowed the Smartphone 1.0 terrain to make it ready for the Smartphone 2.0 iPhone and Android.
Today, I don’t see an AR device that drives that same desire, and I don’t think I’m alone: I personally know of very few AR users. With its silicon prowess, industrial design, and Supply Chain Management, Apple could crush the competition with an AR offering…but will it be a creation that changes the landscape, or simply a device that expands the usefulness and amusement of our iPhones?
We now turn to what I think holds substantial potential without a need for new use cases, science-fiction AI feats, or bitter fights in lower-margin markets: Healthcare.
As an example discussed in a March 2017 Monday Note titled Apple Monitoring Blood Glucose, a 2016 Harvard School of Public Health study pegged the ravaging cost of Type 2 diabetes at $825B per year and growing. Unlike the unpreventable Type 1 diabetes, Type 2 is entirely linked to our lifestyles, to the fact that we eat too much and exercise too little. Ask car makers what they’ve had to do to car seats over the last fifty years…
Blood glucose monitoring is physically intrusive: It requires a puncture. It’s small, but it’s a puncture nonetheless. Now imagine a watch or an ear pod — the latter especially with its close contact with the well-irrigated eardrum — that’s able to read blood glucose without piercing anything.
Today, our smart watches can measure blood oxygen, heart rhythm, and sleep cycles. A number of devices have recently introduced body temperature measurement. Things get more complicated with blood glucose monitoring, which requires a combination fine-tuned detection and AI analysis, but where there’s a will, or, more to the point, money…
Consider this graph:
The rising column of US expenditure is alarming. We spend more for our healthcare than anywhere else in the world, consistently more than 17% of our GDP, versus 3.7% for our military.
This is where one hopes Apple will direct its combination of skills: advanced silicon, software, industrial design, wearables experience, services, manufacturing and supply-chain management. It might not match the Smartphone 2.0 wave, but that was something we probably won’t see again in our lifetimes…then again, that’s what we said about the PC revolution. In any case, Healthcare is a more fecund opportunity than the Apple Car fantasy.
And whaddaya know…the senior Apple exec who “drives the company’s health initiatives, pioneering new technologies and advancing medical research” is Jeff Williams.
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JLG@mondaynote.com
