I had been getting a lot of questions lately about some of the latest rumors surrounding Apple, so I thought I’d address them to add my two cents.
AR Glasses in 2020
Let’s start with the most interesting rumor from a future-forward perspective. Noted Financial Analyst Ming-Chi Kuo issued a report saying he expects Apple to release their AR headset in the first half of 2020. The report claims, what many believe, and I agree with that this headset will be mostly an iPhone accessory. There are a number of points I want to make about this headset that I think need to sit in the back of our minds.
To be frank, I think the first half of 2020 is a bit early for Apple to release an AR headset. Apple usually waits until there are somewhat acceptable products on the market then delivers a complete solution that defines and sets the bar for the category. Outside of HoloLens and perhaps Magic Leap, there aren’t many players in the space, and both of those are so pricey they are outside the range of a consumer market. North Focals by Polar are not a rich media AR experience but simple text and notifications, I don’t consider them an AR headset.
With the market being much more immature than Apple usually likes before they enter, I’m quite skeptical we see this product in 2020.
There is also the market of what problem do these AR glasses solve? Even with Apple Watch, the latest product to analyze and put under a microscope on how Apple launches new products in new categories, they came out with some specific problems they were looking to solve. AR has some potential applications, but most consumers would not feel gaming, directions, notifications, etc., a large enough pain point yet with their current devices that a head-worn computer would solve.
At Creative Strategies, we do quite a bit of research on augmented reality, and that research continues to convict me that this form factor will be even harder to drive adoption than Apple Watch. The face/eyes are going to be an extremely difficult place to convince people to put computers in mass.
Another element to consider is the lack of significant smoke in the supply chain about such a product. At least with the rumored $399 iPhone SE, there is a lot of supply chain smoke and enough to know something is coming. With these glasses, there is little to no supply chain chatter suggesting large orders of glasses displays, chips, or other components that would likely go into this form factor. This point does not mean it is not happening, but it does mean there is nothing in the quantity being made. So if this is released, it will be released in an extremely small volume.
One part of this discussion that could be interesting is if Apple would consider doing a developer launch of these glasses like what Microsoft did with HoloLens 1 and Magic Leap has done with their first release. These products were not designed for shipping in volume but for providing developers with working hardware so they can start developing apps. I wonder if this is not a bad idea, even though unprecedented, for Apple. This would get them some positive feedback from developers, maybe even media, and start to plan the seed something is coming even if not what developers get is final hardware. Given how early this market is and how immature the technology is, even if Apple ships something in 2020, only early adopters, media, and developers will get one so it will function as a beta anyway for them to get feedback and build a market. But, the hard truth is, there is no market for AR glasses, and anything Apple releases in 2020 will have to make a market, and that is not the route Apple usually takes when launching new products.
I still remain skeptical we see this product in 2020, as much as I would like it to happen.
Apple’s $399 iPhone SE 2
Another rumored started by Ming-Chi Kuo is about an updated less expensive iPhone, that could be an update to the SE 2 coming next Spring. As I mentioned, there is more than enough smoke in the supply chain to confirm something is coming. The rumors suggest a new iPhone in the first half of 2020 that will be more aggressively priced. It has been pegged as an update to the iPhone SE, although the report suggests it will look more like iPhone 8 than the iPhone SE.
What is interesting about this product, if true, is what the positioning of such a product would be in Apple’s lineup. Is this lower-priced iPhone designed to go after emerging market consumers in SE Asia or India? Is this product targeting consumers who have held off upgrading because of the price? These will be questions to address whenever/if we see this product released.
For the question of emerging markets, the biggest challenge a product like this could face is if it is competitive with flagship Android devices with larger screens, faster specs, and more for the same price. For the laggards with aging iPhones, it’s not necessarily the price that has hindered their upgrade but more their understanding of themselves and not need the latest and greatest. This group will upgrade eventually, and I question if they will go for a lower-end, less expensive iPhone when they do. Having studied this demographic quite a bit, they tend to get something more new in the hopes it future proofs their purchase and lasts the 4-5 years they hope.
Overall, I’m not convinced Apple needs to play the price game at all. I don’t think it the price of iPhones that are normalizing sales at just shy of 200 million a year. It is more that customers seem content with what they have, and the price isn’t going to change that sentiment.
I know I’m coming off a bit more pessimistic than many of you are used to, but in my mind, I’m trying to be realistic about the state of the market and with what I know about Apple’s customer base. As with anything, these are just rumors, and the in-depth analysis will happen when/if we see any of these rumors become true. But, given they are hot topics, I wanted to throw my analysis into the ring.