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Having followed Apple for decades and covered it professionally for 15 years, I’ve seen and written my fair share of looks back at the company’s annual performance. From a 30,000-foot perspective, these stories tend to be broadly similar even though the specifics vary a little from year to year: Apple ignores or defies critics, releases largely iterative product updates, and makes gobs of money. To the general satisfaction of both Wall Street and Apple’s well-compensated executives, the narrative has become predictable, a far cry from the once rebellious company’s most disruptive, pirate flag-flying days.
So rather than go through a boring, granular discussion of everything that happened this year, or just listing off major product launches, I’d like to take you through just seven of Apple’s most noteworthy 2018 moments. They’re not the company’s only important events of the year, but rather the ones I feel are most worthy of further consideration, as they serve as major milestones, both positive and negative.
1. The Apple Watch finally reached its potential, three years in
Wind the clock back to 2014 and you might recall that Apple was facing a crisis of external confidence — observers felt that there hadn’t been a big enough “disruptively innovative” new product since Steve Jobs died, a conclusion that deeply irked Apple’s executives. So the company held a special event to show off the Apple Watch in September 2014, eight months before its all but disastrous April 2015 release. Clouded by a gold model that sold for up to $17,000, the earliest Watches were so sluggish, modestly functional, and overpriced that even hard-core Apple fans found themselves returning, selling, or never buying them.
Each year since then, Apple has improved the Watch hardware in ways that have slowly won over initial detractors. But it took until this year’s Series 4 models to reach the company’s original vision. The latest model has the bigger display, responsive app speeds, and other cool features people expected four years ago from the company’s memorably great “reveal” video. There’s even a shiny gold version starting at only $699, a price real people can actually afford.
Yes, it took too long, but Apple finally turned a mess of a product line into a viable additional pillar of its business. I’m genuinely excited to see where the Watch goes from here.
2. Apple lost its ‘transparent’ image after a sneaky battery and software update debacle
Apple has spent much of the Tim Cook era building a public reputation for good corporate behavior — pro-privacy, pro-environment, and pro-employee practices that it touts as often as possible. But as long-time Apple watchers know, the reality isn’t that simple: The company tries to get away with a lot of anti-consumer behavior, and has an unfortunate tendency to go silent or obfuscate (if not lie) when confronted with “bad facts.”
Due to ongoing controversies over iOS updates that slowed down iPhones as their batteries aged, 2018 was a particularly bad year for Apple’s public image. After it was discovered in late 2017 that Apple had quietly updated iOS with a “performance management” feature, the company spent much of early 2018 explaining itself and offering remedies to angry consumers, legislators, and regulators in multiple countries. Then, after suggesting that its latest iPhones wouldn’t need similar “assistance,” it wound up releasing the performance managing patch for them, too.
Apple has had other communications-related issues this year, and it was conspicuously occupied with fixing a never-ending stream of iOS and macOS bugs. But the battery debacle is the one consumers won’t soon forget.
3. $1 trillion thanks to peak iPhone, then down again
Apple’s market capitalization hit $1 trillion in August, making it the first public company to reach that stunning level of valuation — a particularly impressive feat given the number of critics who said years ago that Apple’s best days were behind it. The primary driver, of course, has been the iPhone — a product that barely registered on Apple’s balance sheets a decade ago, but now accounts for more than half of the company’s quarterly revenues.
Has Apple reached Peak iPhone? Perhaps. CFO Luca Maestri stunned the financial world by announcing that Apple will no longer disclose iPhone, iPad, and Mac unit sales, a decision widely interpreted as signaling imminent declines in iPhone sales volumes. In the weeks that followed, Apple’s market capitalization dropped by around a quarter, and it’s currently at roughly $790 billion, around $20 billion below Microsoft.
Where will growth come from? My biggest concern is that Apple significantly raised prices this quarter across all of its major product lines, seemingly signaling that the company would be content to make more money from fewer people. But that strategy doesn’t appear to be working, as Apple surprised everyone by mounting an aggressive iPhone trade-in and discounting campaign ahead of the holidays.
Looking at the long term, hiking prices isn’t a smart or sustainable strategy for Apple’s growth. If the company carries the “fewer people is fine” line of thinking further, it’s could eventually reduce its market share back to the generally unimpressive levels seen decades ago, when unaffordable Macs teetered on the verge of irrelevance. Given everything Apple has accomplished over the past decade, it would be astonishing to see Windows devices mount a complete comeback at this point, but if Microsoft’s stock price is any indication, that’s no longer as impossible as it once seemed.
4. Apple Music, Apple Pay, and the rise of Apple services
Though Apple’s services aren’t promoted as heavily as its products, they’re quickly becoming major success stories — and large-scale contributors to the company’s bottom line. In a fairly short period of time, the Apple Music streaming service has gained over 50 million paying subscribers, Apple Pay has become an accepted transaction medium in 30 countries, and the company’s iTunes, App, and Book Stores are now selling so many downloads that people have stopped trying to count them.
Cumulatively, Apple’s services generated nearly $10 billion in just the last quarter alone — a record that will most certainly be broken multiple times over the next year. Apple takes a cut of every Apple Pay transaction and receives cash every time it streams a song, sells a movie, and adds consumable content to a game or app. The more customers it has, and the more they’re using Apple devices, the more money it’s going to make.
The dark side of this otherwise impressive growth is that Apple’s now actively trying to get developers and customers hooked on recurring subscriptions, turning devices into automatic monthly or yearly debit machines until the subscriptions are disabled. Whether this becomes an even bigger problem in 2019 remains to be seen, but even as a long-time Apple user, I’m ready to drop apps in a heartbeat if they start demanding subscriptions, and strongly suspect that most people feel the same way.
5. HomePod and the sad state of Siri
Apple’s $349 “smart speaker” HomePod had all the signs of a standard Apple misfire before its February launch: It was delayed from its original ship date, missing initially promised features, and clearly overpriced compared with existing alternatives. Though some critics were ready to forgive those issues — largely because HomePod (sigh) can play at loud, bassy levels — few could get past HomePod’s mediocre implementation of Siri, Apple’s perpetually troubled digital assistant.
On HomePod, Siri was even more limited than on iPhones and iPads, where the feature already ranked below Amazon’s Alexa and Google’s Assistant in overall performance. Worse yet, HomePod depends almost entirely upon Siri for controls, as it ships without a remote or built-in touchscreen of its own.
Apple’s decision to rebuild its Siri team with help from a Google AI expert and plenty of new hires might — emphasize might — turn things around over the next year or two. But after seven years of waiting for Siri to improve, and seeing only Siri Shortcuts as an example of things possibly heading in the right direction, users have justifiably been migrating to competing solutions instead. It’s unclear why Apple recently decided to bring Apple Music to Amazon’s Echo speakers, but using Alexa alongside Apple Music is certainly more satisfying than relying exclusively on Siri.
6. Wireless: From AirPort to AirPower, soon 5G
Two unexpected developments in 2018 raised serious questions as to Apple’s wireless hardware ambitions. In April, Apple announced that it was abruptly discontinuing its AirPort series of Wi-Fi routers, without an in-house product line to replace them. Apart from suggesting that it didn’t need to keep developing routers thanks to the availability of good alternatives — something that never stopped Apple from competing before — the company didn’t really explain its thinking on exiting the router business, which also included its hybrid router-backup solution Time Capsule.
One possible explanation is that Apple didn’t want to be tied down to any one of three competing 802.11 standards — 802.11ax (now aka Wi-Fi 6) or the two semi-related “WiGig” standards, 802.11ad and 802.11ay. For Apple, which only infrequently released all-new routers, developing a new router would have meant committing to a Wi-Fi standard for years, and it’s possible that Apple just wanted to focus its wireless engineering attention on more lucrative cellular and Bluetooth devices instead.
A lot of 2018 was spent speculating over Apple’s next-generation wireless plans: whatever had happened to its AirPower wireless charger, when it would release a new version of its popular AirPods wireless earphones, and why it was digging an ever-deeper hole for its one-time cellular chip supplier Qualcomm. As the year draws to a close, most of these questions remained, but the company’s clearly preparing for a 5G iPhone with next-generation high-speed wireless capabilities, a topic that will become increasingly important throughout 2019.
7. iPad Pro’s A12X Bionic as dawn of the Mac-caliber Apple CPU
If there’s any other 2018 Apple event that will continue to have an outsized impact into the future, that would be the October 30 debut of A12X Bionic — Apple’s first truly Mac-caliber CPU. The company has been taking small steps toward that moment for years, but there was never before a point when an iPad had just as much horsepower as a current-generation, midrange to high-end Mac. Now the 11-inch and 12.9-inch iPad Pro have changed that, as the A12X Bionic easily rivals more expensive 13.3-inch MacBook Pro models in benchmarks, even comparing favorably with current-generation game consoles in graphics power.
2018 will be remembered as the year when Apple became clearly capable of releasing a Mac with virtually whatever level of CPU and GPU power it wanted, whenever it wanted, without waiting for Intel to engineer and manufacture the parts. We’ll have to see whether that actually happens in 2019 or 2020, but now that A-series processors can match Intel chips, it’s clearly just around the corner.
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