The Dull Edge

The Future Is Here and Apple Is Missing It

A better iPhone just isn't going to cut it anymore.

For the last decade, Job One for the wizards at Apple was figuring out how to make each year's edition of the iPhone more appealing than the last. That's overly simplistic, but it's not too far from reality considering the iPhone generates nearly two-thirds of Apple's annual sales. Repeatedly creating an amazing slab of glass and circuits is what made Apple the the world's most valuable company.

Those wizards are still toiling away, but their magic is not as relevant as it once was. It's clear technology's present and future is not about gadgets but about how technology can blend into the background to make life and work better.

The future belongs to technology that can warn people to leave early for a doctor's appointment if traffic is bad -- or a car that drives itself to that doctor's appointment. The future belongs to technology that lets someone see virtual images of sofas in her living room so she can pick the best one. The future is technology that sifts through years of data to notify a corporate executive about an inventory shortage before it happens.

This future of smart software and computing woven into every molecule of life is coming fast. And Apple isn't ready for it.

That's a subjective assessment, but I'm not alone here. In the technology industry, it's conventional wisdom that Apple is weak in crucial areas such as cloud computing and artificial intelligence that are foundations for driverless cars, complex data predictions and computing that blends seamlessly into work and personal lives. Even the coolest iPhone ever made can't solve this existential problem for Apple. 

This week, Apple is hosting 5,000 of its allies at an annual conference to outline the latest refinements to its products. Apple on Monday outlined how the company's phones, computers, tablets, watches and web TV hardware are becoming smarter and more capable. Apple's message was the company is on the cutting edge of emerging trends such as artificial intelligence, and about how Apple is ushering in the future. Don't believe it.

One small example is a voice-activated home speaker that Apple introduced called "HomePod." I'm sure it will be beautiful and have excellent sound quality, but that's not what these gadgets are about. A speaker isn't a speaker, just like a smartphone isn't a smartphone. These are all Trojan horses for the future of technology and how we interact with it.

Apple gets this, but it's not up to the task. Siri is good enough for many people, but the relative stupidity of Siri, iTunes and Apple's mapping app are a tech industry punchline. And it's hardly a joke. The feebleness of many of Apple's apps and software is a sign of how far the company is from the cutting edge. 

In China, the wildly popular WeChat app lets people invest in stocks, pay for dinner, order a taxi and take a course on quantum physics all from a smartphone. In other parts of the world, Snapchat, Facebook and Microsoft -- yes, Microsoft -- are blurring the lines between the real world and the virtual in ways that could help doctors better learn surgical techniques or let people communicate in entirely new ways. Google's parent company and Uber are fighting in court over technology for driverless cars. Amazon is trying to reinvent how people learn about and buy products online and in stores.

Apple is practically nowhere so far in these emerging areas of technology. 

Apple is hardly standing still, and it has the resources to try to future-proof the company. The company is spending more of its financial firepower than ever before -- about $11 billion in the last year -- on developing new technologies. (The famously secretive company doesn't say what they are.) The company could surprise everyone as it has many times before, but it doesn't feel possible at the moment.

Even if Apple can no longer chart the course of technology, it is likely to remain hugely successful and valuable. Apple is the world's most profitable company, and it's doing smart things to squeeze more money from the hundreds of millions of people who buy its devices.

But financial power was never the point for Apple. Its history was about defining technology and waiting for everyone else to catch up. Now other companies are inventing the future, and it is Apple that is simply trying to keep up. 

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

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