Apple's Next Big Move

Published: 21 Jan 2012

Apple is no longer merely a device manufacturer; instead they are a supplier of integrated solutions, based on a disruptive model of pleasing customers. Disruptive in this context means they reinvent markets and capitalize before others respond — or the market becomes commoditized. Their stock is radically undervalued by normal measures with the reason usually being that investors do not believe that Apple can continue its impressive string of innovative new products.

As I write this, speculation is that Apple will enter the TeeVee business in some way, presumably leveraging their large base of registered users, their millions of iOS screens and their experience with the AppleTV. They may well do this, but my guess is that they do not have enough leverage to do something sufficiently disruptive in that space.

What I think they should do instead is enter the point-of-sale business, that same business dominated today by Visa and Mastercard. iPhones can disrupt what we ‘hire’ our wallet infrastructure to do. For those without iPhones a cheap iPod touch can be bought, perhaps with anonymous ‘top-up’ cash capability. And Apple could even rely on cards for a transition.

This is within Apple’s reach. They already have more cash reserves than any US bank. They have a trusted brand. Soon, near field communication will appear in iPhones, but other point-of-sale technologies are available.

The marketing pitch will have to include security and convenience of course, but Apple alone can make the claim that they will not spy on you — and be believed.

If you buy and use an Android phone, it will always be cheaper because Google subsidizes it to get to your personal information. But what you trade is your privacy: Google’s business model (and that of others) is about understanding you in the extreme so that they and their actual customers can sell to you. You willingly grant them a license to spy on you to a degree that is illegal for the government; however, once you grant this access to Google, Visa and Master card, anyone can purchase your life.

I guarantee that you will not like this.

Privacy

Apple can move into the role of trusted protector of privacy.

Apple’s current business philosophy (since Jobs’ second tenure) is based on delighting the customer with disruptive, bold moves that make life better.

Customers would see moving to Apple as an alternative to (and initially in addition to) using their traditional credit card. It would be more convenient for those with Apple iPhones; it would at least cost no more, but the main advantage to the user would be a guarantee that information about the user’s life would remain the property of the user. It would be stored and shared only in the case that he/she explicitly decided to trade it for some benefit, whether to Apple or some other party. The consequences of this would be made clear to the user.

(Presumably, Apple would perform some analysis on your usage patterns to be able to flag possible fraud. All of my credit card providers do this and it is a welcome service.)

Apple would make it clear that they would comply with any legal constraints and requests by law enforcement agencies, but the contrast with Google and Amazon would be stark — and those are the real competition to Apple at present. I strongly believe that soon there will be a revelation that will expose what the sales-centric life-trackers (which also includes Facebook and soon Twitter) actually do and how they use it against you.

If many people knew what I do about their assault on privacy, there would be a mass uprising against these companies. Apple could fill the void. In fact, I cannot think of any other company with sufficient goodwill to do so.

Naturally, Apple will be in a fragile position on this and will have to be more transparent than they currently are. The recent flap about tracking software on cellphones (including in a limited way, iPhones) affected Apple more than anyone else; presumably, everyoneexpects Google, the carriers and HTC/Samsung to be scuzzy.

Other Innovations

There are areas where Apple can innovate in the banking business beyond transaction management, though transaction management by itself could be huge.

One of Apple’s problems is that they generate a lot of overseas profit that is expensive to repatriate. This geographically distributed capital could allow a micropayment system across national boundaries with no currency conversion fee. Those two elements are rarely found by themselves and never together.

Apple could pioneer in per-use software micropayments. They are already trending toward this already with the App Store, where 99 cent applications are common. Five years ago this would be considered micropayments. What if you could download any app for free and only pay so much according to how much you use it? What if you could subscribe to quality news websites for a tenth of a cent per article read? Or TeeVee shows?

What if you could trade your automated toll payment system for an iPhone?

What if you could participate as a microlender?

What if you wanted to go the other way and sell your personal information, cutting out Google? Suppose you could be paid a nickel for every targeted, geolocated ad you agreed to consider?

Disruption in the very fluid of the economy, and the most intimate value: privacy.

As it turns out, the villains in that particular Carrier IQ story were the carriers, and the host governments, both of whom spy on you, but for different reasons.

It doesn't matter; the information all ends up with NSA.