WWDC20: Advancing Apple’s Mission

WWDC20: Advancing Apple’s Mission

Apple has risen to the challenge of COVID-19 making WWDC 2020, which kicks off on Mon. June 22, entirely virtual and entirely free. Now, the company has an even more profound opportunity to double down on inclusivity.

In our view, WWDC is one example of several steps Apple has taken to assume a leadership position in the global response to COVID-19. Historically, WWDC tickets have been expensive and hard to come by. Attendees paid $1,599 per ticket only after winning a lottery, and the cost would double for many developers traveling from 80+ countries around the world.

This year’s virtual format unlocks Apple’s largest gathering of developers for everyone. Apple has sent an open invitation to anyone who wants to change the world using its tools — a radically inclusive opportunity at a time when inclusivity is in the spotlight.

But Apple’s work in this area has long been underway.

Apple’s Think Different campaign captured the early spirit of a company bent on changing the world regardless of cultural norms. And that 1997 campaign continues to resonate, especially today:  “Here’s to the crazy ones…They’re not fond of rules and they have no respect for the status quo… Because the people who are crazy enough to think they can change the world, are the ones who do.”

In that same spirit, the company recently shared Tim Cook’s reflection on the killing of George Floyd, Speaking up on racism:

“At Apple, our mission has been and always will be to create technology that empowers people to change the world for the better. We’ve always drawn strength from diversity, welcomed people from every walk of life to our stores around the world, and strived to build an Apple that is inclusive of everyone.

“But we must do more. We commit to continuing our work to bring critical resources and technology to underserved school systems. We commit to continuing to fight the forces of environmental injustice — like climate change — which disproportionately harm Black communities and other communities of color. We commit to looking inward and pushing progress forward on inclusion and diversity, so that every great idea can be heard.”

Apple’s mission is a powerful force. Just a few days after posting his statement, Cook announced a $100m commitment to a new Racial Equity and Justice Initiative.

As a free online event, the barriers to joining the Apple developer community have never been lower. I’d challenge Apple to take it one step further and reduce or even eliminate the $98.99 per year subscription cost for the Apple Developer Program. All of this is an investment in making the Apple ecosystem better. A more diverse offering of software and solutions is a better offering.

Inclusivity is a competitive advantage for Apple and the company should double down at WWDC20.

What to expect from the annual software updates

In addition to a missional message, we expect a focus on the typical software upgrades including iOS 14, iPadOS 14, tvOS 14, watchOS 7, and macOS 10.16. An underlining theme with these updates will continue to be security and privacy, also core to Apple’s mission.

  • iOS 14. We expect the most notable new iOS features to include the ability to recall iMessages, an updated fitness app, and a Safari language translator. Our take: The updates will be modest but continue to refine what is already a world class mobile OS.
  • New macOS with Arm-based Mac Roadmap. We expect refinements to iMessage, Siri, and a built-in Safari language translator similar to iOS14. The biggest news related to Mac will be a roadmap for Apple to move away from Intel processors to its own Arm-based processors.  This is no surprise given the company already makes its own chips for the iPhone and iPad. This topic is of particular focus for developers that will have to make changes to code to make sure they run properly on the new Arm-based chips. Our take: The move away from Intel is meaningful. This puts Apple in control of the timing of Mac hardware updates and should improve performance while reducing cost.
  • watchOS 7. We expect the most notable new features to be centered on wellness, including a sleep app along with a blood oxygen estimator. New watch faces and parental controls will also be included. Our take: Apple Watch is still early its adoption curve. We estimate that over the past 12 months Apple has sold about 30m Apple Watches. More importantly, assuming a 3 year watch life, we believe there are 70m active Apple Watches, which implies about 8% penetration into the iPhone user base. Over time that penetration rate will grow, potentially to 33% to 50% of iPhone owners. Leading with digital health and wellness is the winning approach for Apple Watch over the next decade.
  • Additional updates. tvOS and HomePod will likely see updates but we do not have insights on what the new features will include.

Potential Hardware Announcements

Our WWDC hardware wishlist includes:

  • AirTags.  The idea is to make it easier to find your keys, purse, wallet, computer, etc. with Bluetooth tracking tiles. This would compete with Tile, which launched in 2012.  We have been expecting Apple to announce AirTags since last fall. Our take: While not the next AirPods, AirTags should see measurable success and contribute to Apple’s wearables segment growth.
  • AirPods over-ear headphones. Apple has been slowly shifting its energy in hearables away from Beats to Apple-branded products like AirPods. In line with that trend, we expect Apple to announce over the ear AirPods. Some Beats products already auto-connect to iOS with a W1 chip, so the value of AirPods over the ear would be primarily branding and design related.  Our take: Apple could ride the momentum behind the AirPods brand and tap into consumers’ willingness to spend more on headphones. In terms of revenue, this product would likely not move the needle for Apple.
  • New HomePod or HomePod Mini. The voice interface will play an increasing role in computing and HomePod is the best way to get Siri into the home. That said, HomePod’s success has been muted mostly due to its $299 price, about 6x more than most “mini” digital assistants. In 2019 we estimate Apple sold 3.5m HomePods and generated about $1B in revenue, less than 1% of overall sales. Our take: For HomePod to gain mainstream adoption among the current 1 billion active Apple customers, the price needs to be sub $100.