Apple’s Future is an ‘Ecosystem’

Apple is in the business of ecosystem building. No, not that kind of ecosystem.

The tech giant will reveal its next line of products on Wednesday, Sept. 12. The latest iPhone iterations will draw the most attention, but some of the event’s second-tier items may hold the keys to Apple’s future.

Tech commentators have flagged Apple’s construction of an “ecosystem” of products – hardware and applications working together to form a cohesive experience – as the company’s response to relatively stagnant, if still staggering, iPhone sales. While the iPhone will likely continue as Apple’s flagship product for years to come, its continued dominance will rely on a cast of supporting characters represented by the tech giant’s “wearables” and “services.”

At present, the success of products like the Apple Watch or Apple Music relies on the iPhone’s supremacy. The continued success of the iPhone, however, may depend on its role as the irreplaceable heart of a whole body of Apple products. The attractiveness of a holistic “Apple lifestyle” becomes the marching spirit of the iPhone in its struggle against the Android hordes.

Christopher Mims, a tech columnist for the Wall Street Journal, recently identified Apple’s three “acts.” Apple was a computer company, it has been a smartphone company, and is now, Mims argues, searching for the next big thing. In his estimation, “act three” will feature wearables and their supporting applications.

According to Apple’s most recent earnings call, its wearables sector has generated about $10 billion over the last four quarters. By comparison, iPhones generated about $30 billion in the last quarter alone. But whereas iPhone sales have been relatively stagnant, revenue from wearables (and services such as Apple Music or Apply Pay) is on the rise.

The logic of Apple’s future goes like this:

To get the most out of an Apple Watch, you must own an iPhone. The same holds true for most other Apple products, including its various programs, such as Apple Music and iCloud. Yes, Android users can download the Apple Music app, but users get more out of the music-streaming service when it is integrated with other Apple products.

The new Apple Watch is expected to boast a sophisticated heart monitor, making it even more useful for fitness or other health purposes. The latest AirPods (wireless earbuds), meanwhile, will meld more deeply with Apple’s virtual assistant, Siri. As these tertiary Apple products become more sophisticated, they will in effect become marketing tools for the key product that unlocks their full potential — the iPhone.

Apple is also currently developing an “augmented reality” product (Apple CEO Tim Cook has said “AR” will “change everything” and that he is so excited about Apple’s tech he wants to “yell out and scream”). AR overlays digital images and information on the natural world in real time for users to interact with (the most popularly known application of this type of technology being Nintendo’s “Pokemon Go” game).

Undoubtedly, Apple’s tech – likely in the form of eyeglasses – will work best, or even exclusively, with iPhones. If you want to be part of the inevitable Apple AR sensation, you will have to take part in the traditional iPhone sensation.

For consumers already snared within the ever-widening labyrinth of Apple products and services, the iPhone’s indispensability is a strong incentive for customers to stay loyal. The new iPhones will be the most significant products announced at Wednesday’s event – but look down the event’s marquee and you will see Apple’s future.

 

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