Apple’s Playbook

One of the most interesting slides at yesterday’s Apple event was one that Tim Cook used in the context of introducing the new Apple TV:Apple PlaybookWhat I found striking about this slide was that it was a great summation of Apple’s playbook for its tightly integrated approach to hardware and software:

  • Powerful Hardware
  • Modern OS
  • New User Experience
  • Developer Tools
  • App Store.

This playbook was first introduced with the iPhone, although arguably it wasn’t fully fleshed out until 2008, when the developer tools and App Store elements arrived. This approach was then applied again both to the iPod Touch when that launched, and when the iPad launched in early 2010, using the same “modern OS” – now called iOS. Later in 2010, Apple began applying some of these elements back to the Mac (announcing these changes at an event called “Back to the Mac”), starting with the Mac App Store, and continuing since then with a variety of elements borrowed from iOS.

With this as background, it’s no surprise that Apple felt bound to include an App Store in the first version of the Apple Watch, but out of an abundance of caution and a sense of urgency, it was a diluted version of the App Store concept. Only with the launch of WatchOS 2 this month will Apple fully embrace its own playbook for devices when it comes to the Apple Watch. And as of yesterday, we now know that Apple is applying this same playbook to the Apple TV too, something that’s seemed inevitable for quite some time now.

With the release of WatchOS and the announcement of the new Apple TV, Apple now has the same strategy for hardware and operating systems for every element of its portfolio for the first time. The question now becomes which new categories Apple might apply this strategy to in future, and one obvious possibility is cars. Look at that list of bullet points that make up the Apple playbook – is there any element of this that doesn’t apply to cars?

The other thing that’s interesting about all this is that this strategy puts developers at the heart of Apple’s formula for success. Three of the bullet points are about what Apple brings to the table for end users – the hardware, the software, and the user experience these two elements tightly integrated create. The fourth and fifth bullet points are about what Apple provides for developers – the tools to create the apps, and the channel to get these apps in front of customers and make money from them. I think this is a reflection of a genuine understanding on Apple’s part that its devices would be far less meaningful without these third party apps.

Given what’s happening now with Apple Watch and Apple TV, I’m expecting to see a ton of innovation from developers in creating new experiences that are hard to imagine today. We’re about to see the same sort of flourishing of new apps and business models around these devices that we’ve already seen around the iPhone and iPad. And that in turn will reinforce the value of these devices for end users, while creating significant new revenue opportunities for developers.

  • Good points. I found the “Today, we’re going to do something about that” a pretty Jobs-esque line actually.

    On developers though, what is your take on Ben Thompson’s (again today) view that the lack of trials, true subscriptions/upgrades etc. in App Store pricing is the key missing like for iPad, and that it may hobble ATV as well?

    I agree to a large extent, however with Office, Adobe tools, tons of games, lots of graphics apps, plenty of educational apps for families, plus lots of eCommerce apps (which Ben seemed to leave out) etc. it seems that while there certainly could be much more great iPad apps, it’s a reasonably healthy and compelling ecosystem already?

    And on the ATV side, similarly with big-screen games, movies, TV, eCommerce and maybe some other apps, it seems that will suffice? Not much need or UX suitability for productivity or other types of apps for ATV anyway.

    • It’s a great question. I don’t disagree with the specific problems Ben outlines as far as trials, upgrades and so on. Developers have been quite vocal about wanting those things and Apple should certainly add them. But on the Apple TV in particular, there will be two main business models: likely a continuation of the same business models for gaming that we see on iOS, including quite a bit of in-app purchase revenue; and then a lot of content business models that are subscription based, where the purchase itself may or may not take place on the device (increasingly, it probably will). Things like Netflix, Hulu Plus, ESPN, etc. are all based on subscriptions (some directly tied to the app, some tied instead to pay TV subscriptions or other things only indirectly related to the apps. So I’m not as bleak as Ben on the prospects for apps on these new devices.

      • Any sense how IAP would/will work on the new aTV? If you have an AppleID/iTunes card on file, they could easily link that up, but entering your password each time would be a huge pain- would require either typing it a character at a time, in a public screen visible to several people, or else the system could push TouchID approval to another Apple device you own?

        (slightly related question I have on whether aTV could be the only Apple device you own, e.g. an Android user buys aTV, can they set up an AppleID and enter a credit card w/o iTunes or an iOS device?)

        • All app purchases will no doubt just use the credit card tied to your iTunes account, once you’ve set that up, just as content purchases work that way on Apple TV today. You don’t enter your password on the Apple TV today, so I would guess that won’t change unless you choose to turn that feature on (not in front of my ATV right now so can’t confirm if that’s an option presently). I think there’s real potential for using the Apple Watch or iPhone for authentication for not just iTunes and App Store payments but Apple Pay too, but everything I’ve seen so far suggests that’ll come later, if at all.

          I don’t think you’ve been able to set up a new Apple ID on an Apple TV in the past (again, can’t check right now). It could potentially change, but I think the value proposition will be strongest for people who already have some association with Apple devices. Though there’s no reason why you couldn’t set up an Apple ID through iTunes on a Windows PC, for example. And of course with Apple Music launching on Android, you’ll soon be able to create an ID there too…

          • Makes sense, and great point on Apple Music on Android.

            Was thinking about the IAP lawsuit, which Apple did lose, on refunds for unauthorized purchases by kids. With games on new ATV kids may spend tons on that. Probably some new parental control options.

  • David Knight

    A great analysis. I do think the car scenario will be different for 3rd party apps …. at least in terms of mechanical functions.