Venture Bytes #39 - Apple And The X-Factor

Apple And The X-Factor

The highly anticipated 10th anniversary Apple event turned out to be a ho-hum affair, thanks to the press leaks ahead of the event. The phone features are mostly evolutionary rather than revolutionary, as expected. But the iPhone X (10) could prove to be transformative in two respects: the $1000 price tag may succeed in closing the gap between smartphones and personalized computing devices, and the hardware enhancements could set the stage for “cool” AR/VR driven apps.

Apple introduced the iPhone 8, 8 Plus, and the iPhone X or iPhone 10 on September 12. The iPhone 8 and 8 Plus will be priced starting at the typical $699 and $799 price points and go on sale on Sept. 22. The highly anticipated iPhone X will start selling at $999 starting on November 3, a few weeks later than expected. The new phone line up will include a retro glass back and include wireless charging, new camera array, and run the new iOS 11 operating system. Key features on the iPhone X include the edge-to-edge Super Retina display, ability to unlock using facial recognition (Face ID), advanced camera features, and a six-core CPU in the A11 Bionic chip. Additionally it will have an Apple designed GPU that is 30% faster, designed for running Metal 2, machine learning processes, and augmented reality apps. Augmented reality features were showcased with animojis and new game play which should boost the company’s services revenue and potentially lead to new hardware devices. The OLED display has richer color quality and improves battery life by over 2 hours per charge.

Apple also launched the Apple Watch Series 3 featuring LTE connectivity running new WatchOS 4 software. The Series 3 Watch will start selling at $399, much lower than expected, while high end Edition models will escalate in price to $1,399. Apple also launched a 4K HDR Apple TV that will go on sale Sept. 22 and a wireless charging mat dubbed, AirPower, with an expected availability date early next year. Apple will release iOS 11 to all Apple users on Sept. 19.

Amidst all the fanfare, two developments stood out. One, if the $999 price tag for the 64 GB and $1,149 for the 256 GB stick, Apple will have succeeded in doing what it always wanted to do, which is to blur the line between traditional smartphones and personalized computing devices. Given the increasing dependence on smartphones and the role they play in consumers’ daily lives, the company is betting on consumers’ willingness to pay up. In the long run we believe this new pricing strategy will not only be a positive for Apple, but for the handset industry as a whole by easing the pricing pressures on manufacturers and spurring innovation across the industry.

Second, the 10th anniversary launch has set the stage for the iPhone platform to support next-generation user experiences with augmented reality (AR) and virtual reality (VR) on the back of the new A11 Bionic neural engine chip that is included in the iPhone X. The chip is built for machine learning algorithms that will enable speedy face recognition for the Face ID feature and improved AR apps, including the newly unveiled animoji feature that allows users to customize emojis based on the user’s facial expressions. Other AR highlights from the event included AR based games, AR at live sporting events (MLB.com At Bat app), and augmented stargazing (Sky Guide app).

The 10th edition launch of the iPhone was not exactly a game changer as in launches past. But what it did was keep the iPhone series relevant for the future as AI-based applications increasingly take center stage.

Too Powerful to Ignore?

Have the technology companies become too powerful to ignore? This issue is bubbling up in Washington following growing concerns over their size, influence and perceived lack of accountability. Having enjoyed a hands-off approach from Washington for so long, the strong pillar of goodwill appears to be wobbling.

The concern is understandable in an era when social media is increasingly, if not already, the de-facto mainstream media, and cyberspace has essentially become the public square. The sacred pillars of democracy such as free speech, privacy, national security, and free and fair elections appear to be under assault.

The ability of any single entity to significantly arbitrate speech has previously belonged to the government alone. Now the social media giants Facebook, Google and Twitter are largely left to decide for themselves how to arbitrate what speech is permissible or not, whether to flag propaganda or not, and how to regulate advertisements.

Last week’s news on Facebook further accentuated the concerns. While across mediums it is illegal for foreigners to financially influence U.S. elections, Facebook reportedly sold $100,000 worth of advertisements to a troll farm connected to the Kremlin surrounding the U.S. presidential election.

More broadly, every aspect of our life today is being monitored by the tech companies. Our smartphone knows our location at any given time. Our personal digital assistant listens to our voice input through the device’s built-in microphones or through the headset microphone and then runs the input through the servers to figure out what we are looking for and, with the facial recognition technology, will also know exactly who we are. As our personal digital assistant passes all the traffic through servers in data centers for processing, the company gets information about our device, about its location, about us, about all our contacts and the level of relationship with them and more. All the data collected helps the service interpret the instructions we give the assistant. If that’s not enough, Amazon, for instance, is considering handing transcripts of what people say when using Alexa applications over to third-party developers.

A Delicate Balance

All the issues notwithstanding, finding the right balance between fostering innovation and curbing the limits of the innovations will be challenging, but not imposssible. Instead of full-blown regulations, that invariably tend to be static and restrictive, the companies must be held more accountable for the misuse of their platforms. In cases of ad propaganda, for instance, they should be held accountable for leaving their systems open to manipulation by bots and trolls and other techniques. A mechanism should be developed to take objectionable content offline.

More broadly, future innovations are expected to be AI-driven. Some oversight is necessary, and needs to start soon to have any chance of keeping up with the innovations that are expected to be more disruptive and transformative.