Apple, AR, Cars and Value

This post analyses why Apple may be interested in AR and developing a car. It structures my thoughts about both these potential technologies and why they might be attractive to Apple to create a product. Apple has been working on both technologies for a number of years, and invested thousands of hours and people's time into efforts to bring these technologies to the Apple community. 

What does Apple say it will do? See case on Apple and Value in my book The Value of Value.

Apple says it:

- will "continue to make the best products in the world that delight our customers and make our employees incredibly proud of what they do" (Tim Cook 2011) 

- is "unwilling to cut [corners] in delivering the best customer experience to the world. [It's] this relentless commitment to innovation and excellence [that] is the reason that our customer[s] choose our products and this will always be the driving force behind Apple... we remain very confident in our strategy and will use our world-class skill and hardware, software and services to delight our customer[s]" (Tim Cook 2012 Q4 Earnings Call)

- "priced [iPad Mini] aggressively... delivering incredible value to our customers" (CFO Oppenheimer 2012 Q4 Earnings Call)

- "will not make a product that somebody may feed good about it for the moment that they're paying for and then when they get it, they really ever use, that's not what we're about" (Tim Cook 2012 Q4 Earnings Call)

- wants to build great products (Cook 2012), not the most products

- wants to show "just how much we care" (Jony Ive in Macbook Pro unibody video and Grobart 2013)

- "we will only do a few things... where we can make a significant contribution... to society at large... [with a] maniacal focus on making the best products... enriching people's lives" Cook in Tyrangiel 2012.

- "very very simple focus on trying to make something beautiful and great." (Jony Ive on  Steve Jobs in Bergen (2015)

- "instead of encouraging ..  or permitting a thousand ideas to bloom, Jobs insisted that Apple focus on just two or three priorities at a time - Ch. 35 Steve Jobs (Isaacson 2011), or "there are a thousand no's for every yes" (Jony Ive, AZQuotes)

Other things that Apple do, but not say are;

- create new user interfaces for mass markets eg mouse and WYSIWYG for Macintosh, touchscreen in ios/iPhone, digital crown in Apple Watch.

AR 

AR is glasses (or other projections) where digital objects are represented within our field of vision. That is traffic directions may appear as floating arrows directing us which way we need to go. Or our phone or computer screens are represented as floating in space rather than attached to physical output devices. Currently Apple provides AR on an iPhone as digital objects the phone can represent as the phone is directed around the user, using the sensors to tell in which direction and which angle a phone is pointed. Apple makes 3D AR versions of products, such as Macbooks, or logos of Apple Events. Thus in Pokemon Go, a pokemon may appear in front of us on the phone screen, in a certain direction and of a certain size.

What problem does AR solve? AR can provide contextual information in the context of place, direction and angle. AR can also provide a larger if not endless screen for users. Rather than a 27" monitor, or a 50" or 65" 4k television (as monitor), AR can provide a 360* immersive screen, up to the sky and down to the floor. This can enable more content, and some users have large content use cases, such as brokers who have multiple screens or control rooms which have many gauges and dials to read. Similarly on our phones we have multiple messages, emails, posts to read. Each one could be represented as hanging in space rather than in a list, where we only see the title. Extra screen size of AR could enable a home for each message, each communication we receive.

Does AR have application for a large number of users?

iPhone is used by a billion customers, whereas Mac perhaps has only a hundred million users. How many customers might use AR? Does Apple care if only a proportion of iPhones users use AR? Will you need an iPhone to power AR - initially? eventually? 

If all our messages were shown separately, then this view could be useful for anyone who has large amounts of messages, emails, tweets or texts. This could potentially benefit large numbers of users

Can Apple make a significant contribution?

AR may provide new use cases, not just of output but of input. AR could record our surroundings instead of displaying over our surroundings. For instance, AR could record our activity, including identifying objects we see, and classifying their location. So when/if we lose our keys, we can go back to the last time we saw our keys. Where did I put X? But this is a very niche action, that may perhaps only be used once a month.

Another function of AR glasses would be as corrective lenses. If AR could correct what we see, so that we would never need to buy another pair of glasses, that is perhaps hundreds of dollars value. That could also potentially enable a new user interface to sharpen our vision to bring the world into focus. A potentially high impact contribution for users.

What user interface could Apple use for AR? 

If AR works through glasses, and has an unlimited screen space, then how does a user control that space? We could wait and see, but it is interesting and fun to speculate how to control such space. Could your hands control the space, like Tom Cruise in the movie, Minority Report (youtube link)? Could our fingers type on a floating keyboard?  Would voice make sense, dictating our commands, and text? Could our eyes and blinking control actions, looking and blinking to select and choose? Could a finger control a trackball on a ring? Or a finger touching a fingertip? 

Update: Apple launched its AR Product - Vision Pro - on 2 Feb, 2024 for $3500 USD. About 200,000 units were sold in the first weekend.

Cars

Why would Apple make a car?

Some underlying technologies of an electric car are like Apple technology - lithium batteries, cameras, screens, control software, power management, hardware design, user testing, meeting consumer needs. But why does this need to be a car? Could it be an electric scooter? An electric trike? As John Gruber suggested an electric autonomous robot, for inside the house? Electric skateboard? Electric roller skates?

What problem does an Apple Car solve?

Does an Apple Car have application for a large number of users?

Can Apple make a significant contribution? See my recent thoughts. Maybe this market isn't a big enough opportunity for Apple to make a difference.

What interface could Apple use for their car?

Update: 28 Feb 2024 - Apple announced its car project, Project Titan, would be closed and many staff transferred to its AI, generative AI initiative.

More to follow....

What is the value of a dog?

In Melbourne this year, we have had a lot of lockdowns, so one highlight this year, was the addition to the family, of a dog called "Banjo". His mother was a Kelpie, and his father was a Blue Merle Border Collie (see pic below). We say he is Border Collie at the front end (black and white and merle underneath), and Kelpie at the back end (black). He arrived in late June, a sprightly, fluffy 6kg, and now at year end, he was recently weighed at 16 kg. The lockdown has meant he has been mostly at home with us, while I work from home (like today), but he cries when he is left at home, and it breaks my heart. He is so joyous when we come home; wagging and dancing and rolling on the floor, getting much love and pats.

Banjo (8mths) is loved.

What value does a puppy bring?

Love at first sight (8 wks)

Of course, love - he is a new child in the family (to extend our only child little world), but one that grows faster than a human. By the time he is one year old, new research suggests a puppy is equivalent to a human at 40; past childhood, teenage and early adulthood.

He is a new chore, to be fed, walked, played with, his waste managed.

Banjo is a new threat, stealing clothes especially undies and dirty socks (the smellier the better), chewing Christmas presents under the tree, destroying a shoe, pulling clean clothes off the inside drying clothes rack.

He is still a delight, sitting under my feet as I type, chewing a toy. He will sit on the bed, leaning on me as I read. He now sleeps in a bed in our bedroom, now accidents are less likely during the night. I did not expect that a working dog would be so relaxed. He will happily lie at our feet as we watch tv at night, sometimes cuddling up to us as we sit on the couch; where he also often curls up, for family time.

Banjo's Parents

Banjo is an exercise regime, making me walk, throwing his favourite ball.

The Litter

After ten throws, (chasing and some retrieving of the ball) at the park a few minutes away, he can pant for 30 minutes recovering from summer heat.

Banjo is a learning exercise, as we all struggle  to communicate with him, train him to sit, bring the ball back, and when we leave home, the recent challenge is not to bark and disturb the neighbours.

Banjo is also a tool; he experiences the world quite differently to me - acute hearing, a nose when he walks that chases many scents, which evade my senses, and when there is a ball or a stick involved - he becomes a laser focussed, one trick pony who has only eyes for one thing. Chasing a ball his feet thunder past, like a racehorse.

Banjo is a financial cost; he was $500, plus shipping ($200) and came on a plane from Queensland, a two hour flight away, but was born, some 20 minutes drive from where my mother was born and now rests. Coincidentally, we were visiting my Mother's gravesite, on the day Banjo was born, not 30 minutes away, but did not meet him in person until ten weeks later. It cost another few hundred dollars to outfit our house for Banjo - a crate to sleep in, food, toys, leads, vaccinations and monthly worm, fleas and tick treatment ($20 per month).

So Banjo is cost, love, duty, family, fun, time, novelty, and a power tool. So Banjo has many types of value, and overall the love suggests a strong positive emotion. Yet he also causes problems, yet these are overwhelmed by the positive feelings he generates.

 

Where are we at with the NBN?

 It has been nine months, since we passed the target build completion date for the NBN. In the half-yearly report, NBN generated a $0.4B positive EBITDA (effectively cashflow from operations), largely due to declining Subscriber Costs (down $0.6B), and increasing revenue (up $0.4B), while CAPEX is also close to half the previous year, declining from $2.5B to $1.4B for the half-year.

NBN also commenced a post-build investment of $4.5B, announced in the Sept Corporate Plan, with headlines of enabling 75% of the fixed line network to reach gigabit speeds (the highest offered). This will enable all the FTTP, HFC and FTTC (and maybe FTTB) to reach the fastest speeds, and a proportion of the FTTN to be upgraded to enable an FTTP overbuild. There is $700M for regional business fibre hubs, and $300M for co-investment with rural and regional communities.

On the demand side in 2020/21, there has been a significant slowdown of brownfield's new signups (See Figure 1; 2021 Avg 206k/Qtr, 2020 Avg 393k/Qtr, 2019 336k/Qtr, 2018 355k/Qtr):

• Q1 20 - 325,000 additions
• Q2 20 - 250,000 additions
• Q3 20 - 130,000 additions
• Q4 20 (budget) - 120,000 additions. Around 1% of 10M ready to connect premises.
  

Figure 1 - NBN Consumer adoption (2016 - 21); Source NBN Weekly Summary. Data: Google Sheet.

 

Figure 1a. - NBN Brownfield Additions 2021 - significantly slowing. Source/Data: per Figure 1.

NBN retailers (RSPs) are being consulted about NBN's proposed pricing, looking forward for two years, and continue to complain about CVC variable costs, which put pressure on RSP margins, if consumers are not increasing their plan speeds and prices. Both Senate and large RSPs are keenly interested in the potential for NBN to reduce reliance and exposure to rising CVC costs due to increased consumer data demand.

NBN revenue is nearing a $5B annual rate, with more boost from business usage (inc new fibre zones), and demand for consumer speed increases. NBN #FocusOnFast is the 2021 plan to lift subscribers from 50Mbps to 100Mbps and above, through a six month discount of $20-30 on the most expensive plans; reducing gigabit retail prices from $149 to $119, and 250Mbps from $129 to $99, and 100Mbps from $99 to $89 per month. These plans are mostly for unlimited data, so can incur greater CVC costs, though NBN bundles more CVC with the fastest plans to encourage higher plan usage.

Current NBN penetration, given slowing additions, are at the following rates (see Figure 2):

• Brownfields - 71% and slowly rising (2020 - 64%)
• Greenfields - 66% and steady (2020 - 64%)
• Wireless - 57%, jumped from 2019, but now slowly rising (2020 - 53%, 2019 - 43%)
• Satellite - 26%, very slowly rising (2020 - 23%, 2019 - 21%)

 

Figure 2 - NBN adoption by Technology (2016 - 21); Data NBN Weekly Summary: Google Sheet

So NBN is reaching a revenue headwind period, where revenue growth will become more challenging, (and expensive) and come from:

- new additions; new homes in Greenfield sites, or 1% organic growth in Brownfield sites, plus some potential for growth in Satellite and Wireless usage

- lifting consumers to higher speed plans (increasing ARPU); with discounts to entice usage of faster speeds (#FocusOnFast); which will also be impacted by levels of NBN satisfaction

- engaging more businesses on to the NBN (increasing overall ARPU); but which will require investment in a Business Sales force.

A lesser opportunity for growth is through CVC, where rising consumer data usage incurs increasing CVC, which can either squeeze RSP margins, if prices are inflexible, or create price inflation, which could reduce demand and/or decrease satisfaction.

 Figure 3 - Sales and NBN Users - Corporate Plans (2016 - 24). Data: Observable

Other issues:

- NBN is refinancing its $20B debt with the Commonwealth, with private debt by mid-2024, and has also raised $10B private debt at low rates, enabling the post-build investment, and retiring of some Commonwealth debt.

- NBN faces increasing competition from both 5G in slower FTTN suburbs, and more rural wireless sites, and LEOs in the Satellite footprint, but the $140 per month LEO pricing will be more attractive to higher end consumers or businesses. 

- ABAC: The Minister, Paul Fletcher has appointed an Advisory Council to provide guidance around broadband generally and ABAC released its first report, Riding the Digital Wave. The Council will focus on specific industries eg Agriculture and Health, plus Digital Inclusion, Digital skills and small/medium businesses. (p.3)

- In global competitiveness, Australia still compares poorly  (Data: Figshare) against our top ten trading partners in average national speeds (per Speedtest Global), though Feb 2021 saw a 20% increase in Australian national average download speed (from 59Mbps to 71Mbps; which looks like a year's growth in two months), perhaps from more gigabit services coming online. The speed jump would equate to about 1% takeup of gigabit plus 1% superfast (250Mbps) services; significantly higher (8X) than the 25,000 over 100Mbps services the ACCC reported at Dec 2020. ACCC's March report (expected late May) will provide takeup information for over 100Mbps services.

Comparing Broadband Speed with Trading Partners

Speedtest has made its data available globally (in anonymised 600m^2 blocks), so it is possible to see distributions of speed across the country. This enables our cities to compare with our Top Ten Trading Partners eg Shanghai, Bangkok and Los Angeles. Melbourne, for instance, has far slower distribution of broadband services compared to these overseas cities.

Figure 3. Comparing Speedtest results of Australian and Top Ten Partner cities, Q3 2020 (Data; Figshare | Pic: Twitter thread).

Further work - Broadband performance data (Speedtest) vs NBN Technology

An activity to compare NBN technology maps (see https://www.data.gov.au/dataset/national-broadband-network-connections-by-technology-type) (showing regions of FTTP, HFC, FTTC, FTTB, FTTN etc) and average Speedtest results is underway. This will produce maps of Australia cities, showing distribution of speeds, and eventually average speed by NBN technology. There is also a plan to compare broadband speeds with SEIFA index, the socio-economic index of areas, to see if broadband speeds vary by wealth of neighbourhoods.

Figure 4. Speedtest results across Melbourne Q2 2020; colour coded by speed (Data Figshare; Source: Twitter).

The results show speeds vary across the city, with patches of faster broadband, north of Geelong, and in outer west, and in wealthy inner-east suburbs and slower on the fringes of the city, but across the suburbs, your mileage will vary. See Twitter thread for more images and analysis. This data is also loaded to the AURIN geospatial workbench, where Australian researchers can access the data online (Figure 5).

Figure 5: Speedtest data available at AURIN geospatial workbench (Data/Image: Figshare).

Figure 6: Speedtest data Q3 2020 - AURIN - three colour (less than 20Mbps; grey; over 90Mbps; blue; Rest = red) (Data/Image: Figshare).