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Apple made it through the pandemic with more acclaim than bruises: Its highly-anticipated 5G iPhone was a hit, it earned rave reviews for the first MacBooks powered by its own chips, and it became the first American company to be worth $2 trillion.
All that even as Apple’s retail stores around the world were forced to shut down temporarily because of the coronavirus.
But there’s no time for celebration in Cupertino, Calif. Apple investors and customers are already anxiously wondering what’s next, especially as the market for smartphones, which provide the bulk of Apple’s revenue, has slowed in recent years even before the pandemic.
CEO Tim Cook has proven his chops as an innovator since taking the reins from Steve Jobs nearly a decade ago, with the successful expansion into wearable products such as the Apple Watch and the AirPods. And Cook has positioned Apple to be a player in the fast-growing market for digital services like streaming video and music.
Now, it’s time to look ahead to what the next five to 10 years under Cook will look like. With a line-up of veteran executives shuffled into in place in key roles, Apple is embarking on the next phase of its evolution by tackling an ever more challenging category of products — some of which are far removed from Apple’s comfort zone. There’s a pair of smart glasses and a foldable phone in the works, according to various media reports. And of course, there’s the autonomous electric car that Apple is reportedly working on, which would mark the most dramatic business bet in the company’s history.
Insider spoke with a variety of experts, including analysts, a high-profile tech designer, and former Apple employees, to gain a better understanding of Apple’s future at this crucial moment. More important than the design direction and engineering, some experts say, is whether Apple can pull off what it’s done with previous smash hits like the iPhone: launch these new gadgets at the perfect time and make the strongest case yet for their place in our lives.
Apple’s next possible computing device
For years, reports and rumors have indicated that Apple is exploring virtual and augmented reality headsets. Those whispers grew even louder in late January when Bloomberg’s Mark Gurman reported that Apple had planned to develop a virtual reality headset that would serve as a precursor to a possible pair of more sophisticated AR glasses.
In a departure from Apple’s typical approach, the headset currently in development would be more geared toward developers rather than mainstream audiences, according to Bloomberg. This early headset would likely be an effort to encourage developers to build compelling new apps that illustrate the potential of AR and VR technology before releasing a more refined wearable product down the road.
It’s an unusual step for Apple, but an important one that will determine whether Apple’s headset is a hit or a dud. And it’s a challenge that rival tech giants like Facebook, Microsoft, and Sony have struggled to crack.
The global market for AR and VR devices declined for the fifth consecutive quarter in the third quarter of 2020, dropping to 569,000 shipments, according to The International Data Corporation, although that was largely because Sony and Oculus were in the middle of a transition to next-generation products. Still, that number pales in comparison to smartphone shipments, which reached 354.7 million units in the same time period, according to the IDC.
The headset will be packed with high tech sensors and displays, including more than a dozen cameras for tracking hand movements, 8K displays, and support for eye-tracking, according to a report from The Information published in February.
Apple’s leap into augmented and virtual reality will likely be similar to its expansion into other wearables designed for the wrist (Apple Watch) and the ears (AirPods), says Neil Cybart, founder of the well-regarded Apple analysis blog Above Avalon who previously served as an analyst for investment banking firm Keefe, Bruyette & Woods.
“Apple traditionally does not like to come up with replacements for existing devices,” Cybart said to Insider. “Instead they come up with alternatives, and that means [these devices] handle some of the tasks that an existing Apple product can handle.”
This strategy has paid off for Apple so far. The Apple Watch and AirPods, two wearables that are essentially designed to assume some of the iPhone’s roles in a more portable way, have led the tech giant to become the worldwide market leader in wearables despite entering the market late compared to rivals.
Apple’s new generation of design leadership
Apple’s push into new areas like augmented reality would come as the company’s acclaimed industrial design studio is under fresh leadership.
Apple’s iconic designer Jony Ive spent nearly 30 years at Apple shaping its most formative products, from the iMac to the iPhone, Apple Watch, and even the company’s Apple Park campus. He was also the most recognizable face behind Apple’s products. Although he rarely appeared on stage at major keynotes, anyone who has followed Apple’s product launches in recent years has heard him narrate Apple’s marketing videos for new products.
But Ive departed Apple in 2019 to start his own design firm, called Lovefrom, which will count Apple as one of its clients. But that still means Apple’s most famous designer is no longer part of the company in an official capacity as it navigates new computing categories like VR, AR, foldable phones, and more.
Two longtime Apple designers are now overseeing the product design process in his stead: Evans Hankey, vice president of industrial design, and Alan Dye, vice president of human interface design, both of whom will report to Jeff Williams, Apple’s chief operating officer.
Dye has been involved in Apple’s design leadership for years. Around 2015, following the Apple Watch’s launch, Dye was tapped to lead the day-to-day operations of Apple’s design team alongside another design veteran, Richard Howarth, after Ive was promoted to chief design officer, according to Bloomberg.
Hankey has been at Apple for more than a decade and served as Ive’s top lieutenant during his time at the company, according to The Wall Street Journal, and holds many product design patents.
But she has largely stayed away from the spotlight. She has rarely given media interviews, while Dye has spoken publicly about products like the Apple Watch and Apple’s Mac software on numerous occasions in recent years. She never appears on stage during Apple’s product keynotes or its featured in its marketing videos, unlike Dye who appeared in Apple’s Worldwide Developer Conference keynote in 2020.
May-Li Khoe, who spent more than seven years at Apple before leaving in 2014 according to her LinkedIn page, said on Twitter that Hankey had been “making s— run” for a long time.
“When we worked with the ID team, it felt to me like Evans made s— go and everyone knew it,” she also wrote in the tweet thread, which was posted in response to a story about Ive’s departure. “To be frank, I found her pretty inspiring.”
The strong vision that Apple’s tight-knit industrial design team is known for also stems from a culture that was probably set by Hankey, a former Apple employee familiar with the product development process said to Insider. Another ex-Apple employee described Hankey as being narrowly focused on her work.
Ive’s move isn’t the only shakeup to have occurred in Apple’s design team. In 2019, four senior members of Apple’s design team — Rico Zorkendorfer, Miklu Silvanto, Julian Honig, and Daniele De luliis — also departed.
But Ive’s exit, and the departure of other longtime Apple designers, doesn’t mean trouble for Apple’s upcoming product ambitions. Ive has taken a step back from Apple’s daily responsibilities long before he officially left, according to Bloomberg, meaning figures like Hankey and Dye have probably been running the design operations for years.
The recent resignations also mean that Apple has the opportunity to recruit more fresh talent, perhaps designers that grew up in the iPhone era, to help define what might come next, says Cybart.
What’s next for the iPhone
Apple has also been experimenting with another emerging technology that major rivals have explored but failed to popularize so far: foldable smartphones. Bloomberg reported in January that Apple had developed a prototype of a foldable smartphone — an area that its biggest competitor Samsung has highlighted as being key to its mobile product strategy.
But like VR and AR, foldable phones have seen limited reception so far, mostly because of their significantly higher prices compared to those of regular smartphones. Market research firm Gartner predicts that foldable phones will account for less than 5% of high-end phones by 2023, and Strategy Analytics says that foldable phone shipments will hit just 100 million by 2025.
However, that doesn’t mean tech giants like Apple should write off foldable phones just yet. After all, flip phones like the Motorola Razr became undeniably popular despite the fact that older candy bar-shaped phones were more pocketable, efficient, and durable at the time, Horace Dediu, founder and analyst at Asymco who also spent more than eight years at Nokia in the early 2000s, said when speaking to Insider.
Still, Apple does have a knack for miniaturizing new technologies and developing interfaces that work well on new types of computing devices, much like the iPod’s click wheel, says Patrick Moorhead, founder and principal analyst at Moor Insights & Strategy. That could give it an edge in foldable phones and the development of AR headsets.
Whether it’s a VR headset, a foldable iPhone, or an Apple-designed car, success will hinge on two key factors. First, Apple will have to nail the timing by entering these new markets when these new devices are starting to be embraced more widely, but before another rival swoops in and establishes itself as the leader.
Apple has done this successfully with the iPhone, iPod, iPad, and Apple Watch, but missed the boat when it comes to smart speakers. Although Apple sells the Siri-enabled HomePod and HomePod Mini, it’s Amazon’s Echo that largely dominates the market to become synonymous with smart home tech and virtual assistants.
Samsung also threatened to outshine Apple back in the 2013 through 2014 time frame as the smartphone market began to shift toward larger, cheaper smartphones — two qualities Android device makers embraced long before Apple.
At the same time, rivals have also invested more heavily in design.
That’s according to Gadi Amit, president and principal designer at NewDealDesign, a design firm that counts Fitbit, Google, Postmates, Verizon and many others among the companies it’s worked with.
“There are challenges to Apple’s dominance in industrial design,” Amit said to Insider. “You cannot dismiss the progress that Samsung, Google, and Microsoft have done.”
But more than anything else, Apple’s success in new territories like foldable phones will come from the company’s ability to stick to its mantra of only launching new products when they can move the needle in a significant way. And that comes from how Apple’s design and product development organizations function as a team, not as individuals.
“It’s a system,” Dediu said. “Not just the people involved, but the way they work together that really makes things work. [Ive] or anyone else taken out of Apple wouldn’t be able to achieve close to what Apple is able to achieve as a team.”
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