Gene Munster on Apple’s ‘design advantage’

“Across its entire product ecosystem, including hardware and software, Apple has monetized its design advantage to achieve scale quickly.”

From a note sent to Loup Ventures subscribers Friday afternoon:

In a piece on why Apple deserved a one trillion dollar valuation written in May 2017, we argued that “design remains [Apple’s] unique core competency.” AirPods are a great example of the power of Apple’s design advantage.

We estimate that AirPods revenue was $2.4B in the recently reported March quarter, up 101% y/y. We expect the AirPods line to generate $12.2B in revenue this year, growing 43% to $17.5B in 2021. On Apple’s most recent earnings ca ll, Tim Cook pointed out that Apple’s Wearables business (including AirPods, Apple Watch and Beats) is now the size of a Fortune 140 business.

Rumors surrounding the new augmented reality glasses product surfaced this week… The launch timing is uncertain, but one thing is clear: design will be central to Apple’s success in the glasses market. Apple’s track record with wearables, dating back to the EarPods, gives us confidence.

My take: I have more confidence in Apple’s design than I do in the glasses’ raison d’etre, which still seems fuzzy.

12 Comments

  1. Fred Stein said:
    Apple core competency is UX. Design is one part of UX, Apple support is another part. So are privacy and security, etc.

    With Apple Glass, I’m still not seeing the UX (pun intended). Is there a large class of users who want distractions ‘in your face’ as they walk and drive about? In contrast, Apple Watch does not impose itself. One can buy one Watch and many bands it style matters. Likewise with iPhone cases. With glasses, the style component seems tricky.

    These ideas, Apple Car, Apple large wall mounted TV, and Apple Glass don’t really fit Apple that well. Apple can easily afford the R&D spend just to have the options.

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    May 22, 2020
  2. Jerry Doyle said:
    “…. My take: I have more confidence in Apple’s design than I do in the glasses’ raison d’etre, which still seems fuzzy.”

    Steve Jobs’ culture of esthetic design and functionality in the creation of great products lives vibrantly in Apple today. The human experience of using Apple products continues as sublime as walking in one of the Zen gardens of Kyoto that Steve loved.

    PED: Here is what Steve would say to you: “… Some people say, ‘Give the customers what they want.’ But that’s not my approach. Apple’s job is to figure out what they’re going to want before they do. I think Henry Ford once said, ‘If I’d asked customers what they wanted, they would have told me, ‘A faster horse!’” …. People don’t know what they want until you show it to them. That’s why I never rely on market research. Apple’s task is to read things that are not yet on the page.” …… Steve Jobs

    I believe when the glasses arrive that the intimate experience derived will be similar with our personal experience using Apple Watch. We have little idea what we have until we dive deep using it; and then we can’t do without it.

    1
    May 22, 2020
  3. Bart Yee said:
    The same was said for the Apple Watch – what was it going to be good for beside telling time? As usual, Apple already has been thinking way outside the box with AR and engaged developers to do the same.

    Can anyone imagine a set of AR glasses for those who are blind or poorly sighted? The LIDAR can sense and signal the wearer where things in their path might be, as well as provide potential audio signals (via AirPods?) to help them steer through a path. Or for those who are deaf, provide visual feedback to the world around them, or maybe even translate speech to text, even out of visual field?

    Or the AR glasses can be used in conjunction with GPS to pinpoint locations, addresses, landmarks down to the meter instead of 10-20 meters with GPS, along with identification and eye’s up display of info on the area, rather than just a business name.

    Or Siri could give you visual and auditory turn by turn or step GPS instructions. This would be very handy for me as a cyclist instead of having to pull out my phone to “see” the map, I could hear it or see it in my glasses, plus maybe even an eye’s up display of cycling or exercise stats during exercise.

    Imagine being able to see the displays that Iron Man/Tony Stark sees in his helmet.

    2
    May 22, 2020
  4. Bart Yee said:
    Imagine being able to wear the AR Glass and see a pitch being thrown and analyzed in real time. Or watching your hit sail and see the stats on how it was hit. Or throwing a football, or hitting a golf ball (golfers would really pay for that!!) especially if tied into a simulation.

    Or like in the movies, being able to pull up building plans to determine where the money is likely stored, or where the fire escape is? “Hey Siri, what’s the best way out of this Apple hotel?”

    2
    May 22, 2020
  5. Gregg Thurman said:
    One last thought about AAPL on Tuesday.

    Intraday high and daily volume were essentially flat Tuesday through Friday. Despite AAPL’s meteoric recovery this past month I think the flatness comes from a long weekend, with unknowns remaining about how the (read: consumer spend) holiday will fare

    If WS senses a good turnout I think we’re off to the races once again, if not the market may stall. Add to that the possibility of more negative news relative to COVID-19, China trade and Russia violating the Open Skies Treaty and we have a good back drop for a selloff. I’ll be up early Tuesday morning trying to get a sense of what WS is thinking from pre-market.trading.

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    May 22, 2020
  6. Miguel Ancira said:
    I have had a hunch for some time that they are working on prescription glasses. Can you imagine the disruption?

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    May 23, 2020
  7. Gregg Thurman said:
    First day of freedom I tried to do just three things: get my car washed, have breakfast with a friend and get a haircut.

    Breakfast at Perkins started with a line forming shortly after I arrived.

    The haircuts resulted in making an appointment at a “no appointment necessary” 10 chair barbershop for 4 hours later.

    The car wash took about an hour longer than usual due to the line ahead of me.

    Everybody I spoke to said it was about time as they saw a rapidly decreasing rationalization for the lockdown over the past month. Whatever, I was just glad to be able to do things I took for granted in the past (how do you stock pile haircuts?)

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    May 23, 2020

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