Apple Is Starting to Get Exciting Again!
The lineup of Apple products hasn’t changed all that much from when Steve Jobs stepped down as CEO nearly three years ago. Sure, there’s a plastic iPhone model, a tinier tablet and a new desktop that looks like a little black garbage can, but for the most part, Apple remains a smartphone company that also sells tablets, computers and downloadable content.
Every few months, CEO Tim Cook gives Apple fanboys just enough rope to keep their hopes tethered to the brand. He said this time last year that there would be “really great stuff coming in the fall, and across all of 2014.” Yet, the company hasn’t released anything of note in the first half of this year. He said in February that “there will be new categories” of products, but there’s no telling when.
In recent weeks, however, there have been quite a few developments to justify dusting off your excitement about the tech giant. Near the top of the list, of course, is the much-rumored and recently confirmed deal to buy Beats for $3 billion.
The reason to be excited about Apple buying Beats is not because it makes the best headphones (I’m not a fan of them myself). Rather, it represents a continued commitment to music, which has long been Apple’s heart and soul, and an acknowledgement that listening habits are shifting from downloads to streaming and Apple needs to do more than just catch up.
More than that, though, the reason to be excited about the Beats deal is that it hints at some notable changes to the way Apple does business.
Apple has traditionally kept its acquisitions to a minimum. Those companies it has acquired tend to be smaller and have less recognizable brands of their own. The decision to make a multi-billion dollar deal to buy Beats, a high-profile consumer brand, sets a precedent for Apple to put more of its $150 billion cash pile towards noteworthy acquisitions — something analysts have pushed for in recent years.
The Beats deal also highlights Apple’s focus on bringing in fresh talent and fresh thinking. Apple will bring on Beats cofounder Jimmy Iovine as an employee as part of the deal. Indeed, much of Cook’s memo to Apple employees about the deal is focused on Iovine, a renowned record producer and head of Interscope. He could prove to be an invaluable resource as Apple develops new entertainment services and negotiates content deals.
As Dan Lyons, perhaps best known for his Fake Steve Jobs blog, wrote of the rumored deal in Billboard earlier this month, “Apple is undergoing a corporate blood transfusion, one that will radically change the nature of the company.”
There were some signs of that radical change even before the Beats deal was confirmed.
Angela Ahrendts, the prominent CEO of Burberry, took over as head of Apple retail at the beginning of this month, filling a role that had been in flux for much of the post-Steve Jobs era. Her appointment to that position has already served as a morale boost within the company and she is reportedly working to unify the online and offline store experience and push for improvements in mobile payments.
Around the same time, Reuters reported that Apple has been on a biomedical technology hiring spree, a new area of focus for the company and one that signals the possible development of medical sensors and wearable technology.
Walt Mossberg, a longtime tech columnist and confidante of Jobs, recently argued that he believes Apple is poised for a reinvention.
“Apple is going through a reset. There’s just no way around it,” Mossberg said. “It’s not necessarily a bad thing. But it was forced on them by somebody dying who was an extraordinary figure, so they’re going through a reset.”
For the average consumer, new hires are not nearly as exciting as new products, but rumors about new products are getting more interesting, too.
Recent reports suggest that Apple is developing a smart home platform to enter the Internet of Things space and an iOS application called Healthbook to help users track their heart rate, blood pressure and more. It’s also reportedly working on a stylish and advanced smartwatch that may one day even have the ability to predict heart attacks.
Add to this all the expectations for changes coming to streaming music, mobile payments and Apple retail more broadly. Then throw in rumors of a larger iPhone and other updates to Apple’s existing line of products in the fall. Suddenly, it feels like Apple’s product pipeline is overflowing.
“We’ve got the best product pipeline that I’ve seen in my 25 years at Apple,” Eddy Cue, Apple’s SVP of Internet software and services, said at the Code Conference in Rancho Palos Verdes, California, shortly after the Beats news came out on Wednesday.
This has already helped renew some investor enthusiasm. Apple stock topped $600 a share earlier this month for the first time since late 2012 and some analysts expect it to make a run to $700, approaching its all-time high of $705 on the day the iPhone 5 was released.
“Apple has stated that it will introduce a new product ‘category’ (its first since the iPad in 2010) that is also likely to create incremental investor excitement over the next few months,” Toni Sacconaghi, an analyst with Bernstein Research, wrote in an investor note this week, raising his price target to $700 from $615. “We believe an iWatch is the most likely new product category with availability in CQ4. While an iWatch may not have a significant impact on EPS3, a strong product offering and smooth rollout could generate incremental enthusiasm about Apple’s ability to innovate under CEO Tim Cook.”
Can new hires like Ahrendts and Iovine fill the void left by Jobs? Some of it, perhaps. Will new products like the iWatch achieve the iPhone’s level of success? Most analysts doubt it, but that doesn’t mean it won’t be a significant and fascinating business in its own right. Apple could have a string of successes or a string of flops and duds. Either way, it looks like customers have plenty of new things to watch for.
The next era of Apple finally appears to be taking shape.
