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09.27.19

It’s Official: Apple Passes the Torch

by James Lanyon

September 25, 2019 likely won’t go down in history as anything special but it should; it was the day Apple officially passed the torch to Amazon as the pre-eminent driver of consumer technology innovation. 

Backing up a couple of weeks, we see the Apple event on September 10. This was, for a long time, the single most important global technology event. To give you some perspective, the Apple event was so dominant that it altered the value of the Consumer Electronics Show when Steve Jobs decided to move away from product announcements at Macworld, preferring a standalone event. This led to a rash of other tech titans following suit including Google and Facebook. And for a long time, the annual Apple event was the only thing anyone really ever cared about. F8 and Google I/O were distant also rans. Fast forward to 2019 and the annual Apple event is basically a yawner with the biggest headline being a three-lens camera on the iPhone 11. Some rationalize this as being emblematic of Tim Cook’s Apple, which is more subdued, less flashy and primarily focused on global operations compared to Steve Jobs’s never-ending attempt to convince the world he was better than everyone else. Regardless of the why behind this shift, it’s impossible to deny that Apple has handed Amazon the crown as the world’s most innovative company. 

While Apple focuses on sharpening its operational pencil down to a nub Amazon has been busy staking out territory in what portends to be the next great wave of innovation—consumer-focused IoT

As a side note, it’s been very interesting to watch and see if Apple comes out of left field with an answer to Alexa. The company bungled Siri so badly that it seemed almost like a corporate head fake, not unlike when Dominos swore it would make its pizza better only to focus on delivery technology and disruptor positioning branding. Apparently not. All that energy that could go into IoT instead has gone into a shift to services which, while incrementally profitable, won’t serve as a sustainable competitive advantage and won’t serve to rewrite consumer expectations again as the iPhone did. 

As MIT Technology Review points out, Amazon wants Alexa to surround you. This is a particularly important idea as the next shift in human-machine interaction will be that of consumers interacting with intelligent machine applications on a number of touchpoints vs. the current day experience which is primarily driven by laptop or mobile device. At T3, we call this design principle Continuous Design— designing interactions for the continuous set of touchpoints such that transition is seamless, intelligent and useful. 

For some, Amazon’s obsession with Alexa has been a head-scratcher. “Why?” many have asked, “does Amazon insist on sinking money into these devices? They can’t even order anything for you.” That’s a near-direct quote from a design engineer I presented to at a Fortune 100 company in the last year. Why did Cornelius Vanderbilt spend so much time and money laying tracks for what would become the national rail system? Because controlling the means is far more profitable than controlling the ends—a lesson Bezos and Amazon have demonstrated time and again. 

Looking forward, it’s easy to envision a world where Alexa greets you when you open the door, reads your morning calendar to you as you settle into your autonomous vehicle and communicates to others on your behalf to their version of Alexa. Amazon is so well positioned in this regard that Apple’s decision to pivot away and instead focus on the shift to service makes sense. This would be no different than when Amazon decided it was futile to compete with Apple and Samsung in the mobile device race. Would accelerating Siri to compete with Alexa even be a realistic idea? Perhaps, perhaps not. What’s different about Apple in this regard and possibly the most short-sighted is how Apple basically gave up and focused on what it does well, whereas Amazon and Samsung decided to take divergent approaches to capitalize on consumer IoT.   

If Amazon has any real competition, it’s not Apple but Samsung. Whereas Amazon has been busy creating the standard interface for consumers, Samsung, and its Bixby assistant have been equally busy weaving their way into the actual devices that will make up all the billions of nodes that will one day replenish our refrigerators, pay our utilities and run our homes. Samsung’s mobile and home appliance market share has been quietly sneaking Bixby across millions of homes and is basically waiting to be turned on as the standard alternative to Alexa in the smart daily life environment. Samsung has almost twice Apple’s global mobile market share and has been tied with LG for most consumer appliance market share for the past three years. 

(credit above: Samsung Newsroom)

If Amazon is to Apple what Woz was to Jobs, Samsung is basically the CIA. And for good reason— the company has a stellar track record of building global multi-billion-dollar empires by not talking but just doing business. 

Apple will likely continue to coast on the ecosystem it’s developed. The company has more than $225 billion in cash stashed away, so there’s little chance the company will go away anytime soon and it’s entirely conceivable Apple could become a powerful late entrant into consumer IoT. It has the talent, the resources and the technology reach needed to compete. The one thing it doesn’t have? The culture and drive. That’s where Amazon now reigns supreme. 

James Lanyon

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