Apple at Forty: Can a Walled Garden Thrive in the New Digital Era?

image-20160331-9712-1nmyh2zGuest post: Mark Stilton, a business professor at Warwick University, discusses Apple on its fortieth anniversary.

The stand-out feature of Apple’s 40-year rise to become the world’s largest public company has been its ability to convert ideas into designs that have redefined consumer products. It is astonishing that the iPhone only arrived in 2007 but, in less than a decade, has helped redefine communication, computers, music and the internet.

But just as the PC age transitioned into the mobile computing market, we are now seeing the start of a shift to the era of the “Internet of Things”. What is the future for Apple as the focus shifts from computers in our pockets to computers in all the objects around us, from our buildings to our transport to our kitchen appliances?

The greatest sales growth in Apple’s history came in 2015 but we’re already seeing the mobile and tablet markets mature. Apple’s latest releases – the iPhone SE and the iPad Pro – are really just variations on existing products. When a company runs out of new countries to expand into and its new products are just there to fuel replacement sales, it can expect to see less and less growth.

Internet of Things

The technology market is a fickle and fluid world, new devices and solutions can often come from new directions that disrupt products and services. While the PC and mobile market has become a connected cloud of content and apps – such as Apple’s iCloud online storage system and Siri voice recognition program – this design is now shifting into “connected objects and things”.

“Internet of Things” has become a broad term covering “what is coming next”. This is a move to connect 50 billion objects or more into a new era where individual cars help plan a city’s traffic management and fridges automatically order more food for you when you run out.

But how do I make a phone call? (Shutterstock)

But how do I make a phone call? (Shutterstock)

We’ve already seen the beginning of this movement with the advent of wearable devices that track your fitness levels and allow you to make contactless payments. But Apple’s entry to this market, the Apple Watch, has made far less of an impact than previous new launches. Its first connected device for the home, Apple TV, has had similarly limited success.

Apple has also introduced developer software to allow other manufacturers to connect their home appliances (HomeKit), medical and fitness devices (HealthKit) and even cars (CarPlay) to the company’s technology. But these things remain underdeveloped – early market rather than mainstream.

Can Apple replicate its success?

Apple’s success has been based on redefining existing products, but when it comes to new technology markets it has little to no track record. While Apple Watch and Apple TV are potentially leading products in their markets, they still aren’t radical compositions of technologies that can produce the kind of popularity and “wow factor” we saw with the iPhone and iPad. Even with the firm’s reported move into driverless cars or other possible difficult, high-risk “moon shot” projects, the question remains whether it can create a critical mass for the new category of connected computing.

The other issue for Apple is that the Internet of Things involves connecting many different types of products, appliances and content services from not just one company but potentially hundreds, including rival system manufacturers. This differs significantly from Apple’s previous “walled garden” approach that has involved working with app developers, but making core technology incompatible with that of competitors – right down to its charging cables. The question is whether the firm’s home, health and car development platforms will also remain closed to rival companies, preventing customers from picking and choosing from different systems.

With its past record, the expectation of Apple is sky high. But even the enormous funds of US$160 billion that the company is sitting on – more than the GDP of many small countries – is no substitute for creativity and genius. I believe Apple will be able to position itself at the vanguard as the market moves past this latest inflexion point. But having your own walled garden may not be enough when consumers and enterprise want a multiple-connected experience.

reposted under a CC license from TCThe Conversation

images via Shutterstock

About Mark Skilton (1 Articles)
Mark is a Professor of Practice, University of Warwick. His research interests are in technology ecosystems around defining value and monetization; multi-channel operating model strategies; data standards, governance and compliance, and visualization strategies.
Contact: Website

7 Comments on Apple at Forty: Can a Walled Garden Thrive in the New Digital Era?

  1. Wozniak is voting his wallet (and opinion) betting on Amazon’s Alexa.


    Amazon recently released code and instructions on how to turn a Raspberry pi into a cut-rate Echo with full Alexa support.

    They plan to be firstest with tbe mostest.
    That hill is going to get real steep real fast.

    • It’s also going to get cheap real fast. Is it really worth Apple’s time and money?

      This “internet of things” feels more like an opportunity to fill your home with relatively cheap accessories rather than a handful of expensive electronic gadgets, and that’s not Apple’s thing. They leave that for other companies.

      But if Apple does get in to the IoT, the most likely scenario is that Apple won’t announce their product until after interest dies down 12 months from now. I wouldn’t expect to see the iThing until 2018, if past trends are any indication.

      • Cheap, ubiquitous, and low margin.
        Perfect for Amazon and Google.
        I can see Google introducing a Nest thermostat that serves as a home automation hub.
        It’s a market where Amazon is facilitating the development of front-end devices and back end services and aiming to be “merely” the integrating middleman.
        Not a market that Apple would want into at all.
        Apple may dabble at the edges but I doubt they’ll go there.
        The car business is where they’re headed.
        It’ll give them a chance to charge $50K a pop.

  2. Yes, all empires fall, so I guess Apple theoretically must fall someday. But there is no evidence that is likely to happen any time soon.

    And yes, sometimes people come up with innovative products that disrupt the industry. But there is no particular reason to believe that Apple might not do that. (Again.)

    And yes, one can imagine a company coming along some time in the future that will really give Apple a run for it’s money. But who knows what that company might be, or when it will appear.

    So let’s return to reality. Who is going to beat Apple right now? Microsoft? It’s failing at just about everything new it is trying to do. Samsung? Already on the ropes. Google? Nest is a huge mess. Other than search, they have yet to prove they can create profitable businesses. And they have a huge string of failures like Google Glass and Motorola.

    Who else is there? IBM has joined forces with Apple. So have many other major companies. Is it going to come from the telecom world? Not likely. How about a new startup? Maybe, but if they have something promising, Apple can just quickly buy them up.

    So that pretty much leaves Amazon. And yes, the Echo is kind of nice. In a cool gadget way. But Amazon’s smart phone was a disaster. Amazon can compete at the low end, but then Apple continues to dominate high end products.

    Also, all this talk about new and exciting products is fine, because it doesn’t require any real research or thought. But Apple is building an enormous infrastructure that is going to be very hard to match. In addition to their own software and hardware manufacturing abilities, they are now designing their own custom chips, and their distribution system, including Apple Stores, allows them to move millions of gadgets almost instantly (Amazon can do the same) into the market. That’s really going to be hard for other companies to match.

    It’s also interesting that the minute Apple enters a market, and dominates it, that market suddenly isn’t “important” anymore. Smartwatches were the next big thing, until Apple came in, sold millions, made tons of profits and took all the market share (certainly for smart watches over $200). Then suddenly, smart watches have no future. It’s not a big deal. People underestimated the iPod too. And the iPhone didn’t sell well during it’s first couple years.

    As for the Apple TV, that too is being radically underestimated. It’s basically a $200 Apple computer. Apple has deliberately gone slowly on it so they don’t scare the TV Networks and don’t undercut their iMac sales too quickly. I suspect it will be a big deal in the future. (I’m too lazy to check, but I’d guess it’s sold three or four times as well as Amazon’s Echo.)

  3. Some day another company will probably be bigger than Apple. Which one? I don’t know. No one does, and neither did anybody 40 years ago. Nobody can predict the future.
    38 years ago you could buy Radio Shack, Texas Instruments, Sinclair and plenty others. IBM owned 90% or more of the computer market, HP sold calculators that everybody bought (6 years earlier I bought an HP-35 in Switzerland. It cost me 600 dollars).
    How big was Microsoft at the time? A two kids operation?
    Instead of predicting Apple’s death (for the umpteenth time) at 40, we should reflect how much the world has changed in this period

  4. I don’t believe the Internet of Things is where Apple will be heading. First, as stated, you absolutely must be able to integrate with all sorts of manufacturers unless you want to be developing your own light switches and ceiling fans and thermostats and watering systems and home entertainment equipment (not to mention $5000 smart refrigerators [Samsung]). No company can do everything that home automation is going to include.

    But second, Amazon is really the only company set to profit by this, because their device (the Echo) can then be used to buy more stuff from Amazon. It can sell Prime and add-on music subscriptions to be used by the device. You can reorder Amazon purchases from it. You can do your grocery shopping with it. It can sell you all those other home automation gadgets that you will need to take full advantage of the Echo. Amazon can afford to discount the Echo to rock bottom and still make a ton of money off the additional sales that it brings in. I have had the Echo for only a few months and have already bought through Amazon a Dot, an Insteon hub with 2 light plug controllers, an Insteon dimmer switch, and a Harmony hub – all as a direct result of the Echo purchase. While Apple and Google might be able to sell some digital content with their own devices, they have no where near the potential for additional profit that Amazon has.

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