I don't see any value in coming up with tech predictions at the beginning of a calendar year. Predictions are nothing more than an attempt to add a bit of manufactured clarity to what is ultimately a lot of unknown. Instead, January is a great time to embrace that unknown. One easy way of doing this is to come up with a list of questions for the new year. This not only helps guide our analysis in the coming months, but also proves incredibly useful for navigating Silicon Valley and Wall Street.
My first set of Apple questions was published in January 2015 (available here), followed by the second installment in January 2016 (available here). My thoughts and observations on Apple's 2016 are available here.
Here are my Apple questions for 2017:
- New iPhones. How many new iPhone models will Apple unveil in 2017? For the first time, Apple is in a position to potentially unveil three different iPhone screen sizes simultaneously. Significant design changes are on the table for at least one model as well. This should not be treated lightly as it will test Apple's supply chain and demand forecasting.
- New Features. What will be the key new features found with the new iPhones? Traditionally, Apple has positioned three or four new features as the primary selling points. These are often a combination of hardware and software features. With the iPhone 7, Apple unveiled a list of 10 features although one could boil the list down to four primary features: Jet Black, the camera, stereo speakers, and wireless (AirPods).
- OLED Displays. How will the rumored OLED display shortage hamper Apple's iPhone strategy in 2017? It's been hard to miss stories about the looming shortage of OLED displays. Meanwhile, the long-standing rumor about the iPhone line has been that Apple wants to transition to OLED due to the potential benefit on battery life in addition to OLED producing better picture quality.
- iPhone Plus. Will Apple continue to differentiate the iPhone Plus model from the rest of the iPhone line? In 2016, the iPhone 7 Plus received a dual-camera system. It is not unreasonable for Apple to eventually give the largest-screen iPhone a completely different design than its smaller siblings.
- iPhone SE. What are Apple's plans for the iPhone SE? The $399 4-inch iPhone SE was the sleeper hit of 2016. While the product may not garner many headlines, the iPhone SE has played a major role in returning the iPhone line to unit sales growth. The combination of a smaller form factor and low price has been appealing to many customers (both existing iPhone users and new users).
- Pricing. How will Apple price its new iPhone lineup? Apple wasn't shy in passing along higher component costs found with the iPhone 7 Plus. At the same time, Apple is currently milking the iPhone when it comes to positioning the device as a new user magnet. This involves continuing the multi-year trend of gradually lowering iPhone pricing.
- New User Growth Trends. Will Apple see a slowdown in iPhone new user growth in 2017? While the iPhone's contribution to Apple financials cannot be overstated, the product plays an even more important role for Apple. The iPhone is Apple's single most effective tool for expanding the user base. In 2016, the iPhone installed base grew by more than 100M users. This is on top of the iPhone seeing 100M new customers in 2015. (The math behind these figures is available here.) A vast majority of these users are new to the Apple ecosystem. No other Apple product comes close to having these new user numbers.
- Upgrade Cycle. The iPhone upgrade cycle has been slowing as iPhone users hold on to their devices for a longer stretch of time. How will the new iPhones impact the upgrade cycle heading into 2018?
- New Apple Watches. Will Apple unveil new Apple Watches in 2017? Given the product's unique attributes, one cannot assume that Apple will follow an annual cadence with Apple Watch updates. However, September is a logical time for updates given the device's propensity to be gifted at the holidays. In addition, Apple's expansion of the Apple Watch line into Series 1 and Series 2 opens the door for a number of different options when it comes to updating the Watch line.
- New Features. How will Apple push the Apple Watch forward? Given the product's smaller supply chain footprint, especially in comparison to iPhone and iPad, there has been a noticeable lack of leaks surrounding potential new Apple Watch features. Logical choices include better battery life and faster processors.
- Watch Bands. What kind of new Apple Watch bands will Apple unveil? Watch bands play a crucial role in Apple Watch adoption. New colors, materials, and collections seem likely at some point this year.
- watchOS 4. Which new features will anchor watchOS 4? New Watch faces and complications are high on the list. In addition, further refinements to the user interface would go a long way.
- Marketing. How will Apple Watch marketing evolve? We have seen Apple take Apple Watch messaging from a mini iPhone on your wrist to a health & fitness device that can do other things. This change gives Apple a much more effective strategy for competing against Fitbit. While the health & fitness focus may suffice in the near term, it's not a long-term marketing strategy as it will ultimately sell Apple Watch short.
- Price Cuts. Will Apple lower Apple Watch's entry-level price? The company has been aggressive when it comes to Apple Watch pricing. In just 17 months on the market, Apple Watch's entry-level price went from $349 to $269. This past holiday shopping season, Apple Watch Series 1 was available for $199 thanks to Black Friday promotions in the U.S.
- New Partnerships. Will Apple unveil new partnerships for Apple Watch? In 2015, Apple kicked off its Hermès partnership. Instead of announcing another traditional luxury partnership in 2016, Apple unveiled a significant tie-up with Nike for Apple Watch Nike+. Each partnership contains much intrigue with Apple not holding anything back in supporting its Watch partners.
- Financial Disclosures. When will Apple begin to disclose additional details about Apple Watch sales? The company already provides clues as to how Watch sales are trending. At a certain point, the benefits associated with releasing quarterly unit sales data will outweigh the drawbacks.
- New AirPods. Does Apple plan on updating AirPods in 2017? AirPods aren't just a pair of wireless headphones. They are Apple's second wearables product. September would seem to be the most logical time for a revised version given its proximity to the holiday shopping season.
- New Mac Desktops. Does Apple plan on updating Mac desktops in 2017? Due to a number of reasons, Apple has been updating the Mac line in a piecemeal way. In 2015, Apple unveiled a 12-inch MacBook that gave major clues as to Apple's design strategy for Mac portables. Seventeen months later, Apple unveiled the new MacBook Pro with Touch Bar, which unsurprisingly shared much of the design language found in the 12-inch MacBook. We have not yet seen Apple's plans for the Mac desktop.
- Mac Pro and Mac mini. What is going to happen with the Mac Pro and Mac mini? A Mac mini increasingly looks out of place given its heritage as a product designed for enticing Windows users to Mac. Meanwhile, the Mac Pro may still interest the Apple Industrial Design group for no other reason than lessons learned from its unique manufacturing process.
- iMac. Where is the iMac's place within Apple's ecosystem? Management has provided a few clues suggesting that the iMac will continue to receive attention and resources. This may alleviate some concerns held by current iMac users worried about the lack of future updates. However, it's difficult to shake the theory that there may be something greater in store for the iMac. Are we moving to a point at which Apple will look at the iMac as the only Mac desktop? This would certainly create a firestorm within some parts of the Mac community.
- MacBook Pro Pricing. Will Apple reduce pricing for the new MacBook Pro in 2017?
- New iPads. Will Apple unveil new iPads in 2017? As with the Mac line, Apple has been updating the iPad line in a piecemeal way. Apple unveiled a 12.9-inch iPad Pro in September 2015, and this was followed by a 9.7-inch iPad Pro in March 2016. The current iPad line feels incomplete as only two of the five models that make up the line are new.
- iPad mini. What are Apple's plans for the 7.9-inch iPad form factor? Even though we have seen Peak iPad Mini, Apple is still selling more than 10M 7.9-inch iPads every year. There would be demand for an updated model.
- New Apple Pencil. The Apple Pencil was released in November 2015. Should we expect an updated Apple Pencil in 2017? Will the iPhone receive Apple Pencil support?
- Original Content. Will Apple push further into original content programming? We will soon get a look at "Vital Signs," Apple's first scripted TV series as well as "Planet of the Apps," Apple's unscripted reality TV show.
- Redesign. What does Apple have in store for iOS 11? This question could arguably turn into an entire post on its own. Given Apple's direction with the iPhone, an iOS redesign is high on the list. The traditional home screen and rows of apps are dated. In addition, an iPhone with the home button built into the screen requires iOS changes. We already saw some of these changes with iOS 10 with the greater emphasis on swiping left, right, up, and down instead of going back and forth to the home button. There is much more that Apple can do along those lines to have iOS 11 build off of iOS 10.
- Paid User Trends. What is a realistic year-end goal for Apple Music paid users? Apple grew Apple Music by approximately 10M paid users in 2016. This would suggest that 35M to 40M paid users is an attainable year-end goal for Apple Music.
- Pricing. Will Apple reduce Apple Music pricing to drive stronger customer adoption?
- Music Exclusives. We know Apple will continue to bet on music exclusives. How will Apple double-down on music exclusives?
- Tidal. What is going to happen to Tidal? Jimmy Iovine has been very careful to paint a rosy picture of the relationship between Apple Music and Jay-Z. However, Iovine is then quick to argue there will be consolidation in the music streaming space. Notice how Tidal, and not Spotify, received a spot on this year's questions list. Apple Music's success is increasingly becoming decoupled from Spotify's path forward (an IPO or sale).
- Apple Maps. How will Apple improve Apple Maps? We are getting to the point where Apple Maps is legitimately great in certain parts of the world compared to its competition. In the U.S. Northeast, Apple Maps is a winner. In other parts of the world, it's another story. Nevertheless, Apple has made much progress with Apple Maps and the incentive is there for ongoing improvement given maps' importance to Apple's transportation initiatives.
- Apple Pay. How will Apple work to improve Apple Pay acceptance in the U.S.? Outside the U.S., Apple Pay is seeing quite a bit of success. However, the U.S. is proving more difficult from the perspective of getting retailers to support Apple Pay. This has had a negative impact on customer adoption.
- Messages. What new features will Apple bring to Messages? Apple Pay support is coming eventually. Picture and video filters are other items worth considering.
- Siri. Needless to say, Siri will be a popular talking point in 2017. What does Apple have in store for SiriKit? Greater third-party support via Siri APIs would be high on the list. In iOS 10, the Siri API works with just six types of applications. Regardless of the progress made with Siri, I have a strong feeling that a certain segment of the Apple user base will remain incredibly disappointed with Siri's capability in 2017.
- Autonomous Driving. After a strategy shift in 2016, what kind of progress will take place within Project Titan in 2017? Reports have positioned 2017 as a critical year for Apple's autonomous driving R&D efforts.
- Hardware Hires. Will there be new clues regarding Apple's ongoing interest in automobile hardware? A few months after Titan hit some speed bumps, Apple poached Alexander Hitzinger, a Porsche technical director responsible for the Porsche 919 hybrid. Hitzinger easily qualifies as one of Apple's most accomplished and talented hardware hires from the auto industry.
- Bob Mansfield. A hardware guru, with a proven track record of success, is leading Apple's car development project. It's difficult not to come up with a long list of questions about that dynamic.
Washington and Wall Street
- U.S. Tax Reform. When will we see U.S. corporate tax reform? While this question is seemingly put forth every year, odds of some kind of progress in 2017 are at their highest in years.
- U.S. Manufacturing. How will Apple respond to calls to bring more manufacturing to the U.S.? Upon closer examination, there is little chance of Foxconn and other Apple assemblers bringing high volume production to the U.S. any time soon.
- Wall Street Narrative. Apple still doesn't have an effective narrative on Wall Street. Will management find a sustainable narrative for Apple on Wall Street?
- Buyback. How will Apple approach its buyback program in 2017? For the past few years, Apple CFO Luca Maestri has been overseeing a buyback program operating at its limits. Having the vast majority of its cash offshore hasn't helped Apple's capital management program. Apple can only raise so much debt to fund its dividend and buyback activity. Corporate tax reform, including changes to how offshore cash and earnings are taxed, will have a major impact on Apple's buyback (and dividend) strategy.
- Turnover. Will there be any executive turnover in 2017? There hasn't been much movement within Apple's upper ranks in recent years.
- M&A. Will Apple continue to adjust its M&A strategy in 2017? Even though Apple continues to rely on M&A for filling holes in its asset base, there have been signs of change taking place in terms of Apple's investment philosophy. The company is willing to be a bit less secretive in order to get better access to newer technologies. The $1B investment in Didi and allowing AI researchers to publish are two examples. We already see signs of this revamped M&A strategy in 2017 as Apple just confirmed it will invest $1B into SoftBank's tech fund.
Apple Industrial Design (ID)
For the first time, I am giving ID its own dedicated question category. Given the sheer amount of power given to ID within Apple, it only seems fitting.
- Jony Ive. Simply put, will we get any surprises from Jony in the new year? It's safe to say Jony will continue to make some people uneasy in 2017. For 2016, the Apple design book certainly counts as a surprise. The completion of Apple Campus 2 this year may represent a major news event involving Jony given his immense contribution to the project.
- Marc Newson. Will we get any clues as to Marc Newson's role within Apple? I continue to think Marc Newson's involvement within Apple is being underestimated. Newson played a critical role with Apple Watch development and has experience with various product categories, including jewelry and cars, as well as a range of materials.
- Departures. Will we see any departures from the close-knit group of industrial designers in 2017? Danny Coster, who was considered one of the most senior members of the team, left Apple last year to help GoPro find a future. While one departure is not necessarily a sign of concern, it is something worth noting. Additional departures would clearly reveal changes are taking place within Apple Industrial Design.
- New iPhone Nomenclature. Will Apple change its iPhone naming strategy? As the iPhone upgrade cycle gets longer, it makes that much less sense for Apple to stick with its current iPhone nomenclature. I will admit there is quite a bit of risk found with altering naming for such an iconic and popular product. However, that is usually the exact scenario that requires a name change. We are likely moving to the point where we simply refer to iPhones as "iPhone mini," "iPhone," and "iPhone Plus."
- An iOS-powered MacBook. When are we going to see an ARM-based MacBook powered by an iOS variant? Given Apple's unusual Mac updating schedule, 2017 seems off the table for a release. Nevertheless, we may receive additional clues during the year that such a product is coming down the pipeline. It is becoming not a question of if, but of when.
- Foxconn. What should we expect from Foxconn in 2017? Apple's relationship with Foxconn is becoming more intriguing by the day. Foxconn has become Apple's most important business partner.
- New Products. What are the leading candidates for brand new Apple products in 2017? For 2015, I positioned an "Apple Pen" as a likely product in the R&D labs. That same year, Apple unveiled the Apple Pencil. Last year, I positioned a ring and "wireless EarPods" as the leading candidates for a brand-new Apple product. We got AirPods in December 2016. For 2017, a brand new health-focused product, possibly working alongside an Apple Watch, and a ring worn on your finger stand out as possible new products. Wearables are increasingly becoming a focal point for Apple's industrial design group.
- Other Products. There is a somewhat large bucket of rumored products (hardware, software, and services) in the Apple labs. We can include various AR, VR, wearables, stand-alone speakers, etc. Will any of these see daylight in 2017?
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