discountopinion

OpenAI got the mindshare initially for ChatGPT but have lately been deteriorating in quality. Google’s Bard is heads and shoulders better, but likely would not have been public yet if OpenAI and the stock market did not force Google’s hand.

Siri is a green screen voice CLI today compared the LLM driven services like Bard. I would love to see a beta track with Siri where an experimental and fail fast playground is available for pushing these technologies into Siri. I get that Apple wants things to “just work” before making it mainstream to all. 

Tech like AutoGPT with an increasing amount of “autonomous” automation powered by LLMs would be amazing to link to Siri.

Amazon is blinking with Alexa cuts, MS is leaving the battlefield with Cortana.. Google is still there and is a very potent force. Apple has the opportunity to make a dent in the universe now. In my view it is tied into a major backend upgrade and also a push into making more iCloud connected devices first class citizens with Siri as a first class citizen interface.

Stronger than expected quarter.

Note that gross margin is higher than last year. Impressive cost control on the product side while investing in services and broader R&D. Likely a lot of cash is going into Vision Pro and the refresh of products for next couple of quarters going into the holiday period.

My feeling is that the emerging market story of growth is akin to the early hockey stick growth of the services division. In the early days of services it was a curiosity but over time became an increasingly highlighted item in the results. The upside in emerging markets is incredible as the population is increasing in affluence and Apple products being aspirational and relatively accessible compared to other aspirational and status products.

The enterprise story for Apple is something they have been successful in growing but still feels like a hobby in Apple’s go to market vs a concerted push. End users are more responsible for their inroads than their strategy. Apple could likely offer a cybersecurity value add managed service for Apple centric firms that could help the SME segment immensely. This would likely goose the gross margins quite materially. Cybersecurity is the fastest growing segment for Microsoft as a comparison. Apple does a lot of good in security, but mostly transparent to the end customer. 

My wish for apple is to make their platform strategy more multi-polar and make the Home and Watch first class citizen sub platforms and thus equal peers to the iPhone and iPad. 

Apple’s push of manufacturing into India is a fantastic move and will incentivize India’s authorities to make Apple’s expansion there successful. They can likely take many pages out of their China playbook and implement in India to a similar effect of growth over time. Many emerging market countries called out in the earnings call are high population growth countries with young populations that provides a glide path for growth of the TAM in these countries.

Apple devices really are the operating system of my life. I hope that the improvements move the needle even further on their existing offerings and include some jaw dropping surprises.

Personally I would love if AAPL could:

Substantially improved Siri functionality and integration into the broader app eco system. 
1st party generative pre-trained transformer functionality integrated into Siri.
Full and native unreal engine or 1st party competitive alternative.

Substantially improved HomeKit functionality and automation. Ensure HomeKit automation is fully integrated with shortcuts on steroids. Like IFFT and/or iCloud based runners for cloud based jobs but for the rest of us.

Health:
----
1) Further improve Apple Health by adding a 4th ring on mental/brain health to include brain feedback devices, meditation & mindfulness as formal "close your ring" goals.
2) First party skin lesion/mole tracker. Using computer vision, lidar etc to map and track changes. Unfortunately a rapidly increasing health issue for many people.

Security:
----
3) Prepare and later launch 1st party security keys in a similar format to AirTags. 
4) Refine FindMy alerts and include some system event alerting into the service to better understand why a device is not reachable.. i.e last seen it had X% battery or received a device airplane or shutdown event.
5) Augment Pin unlocking with another option to only unlock if Apple Watch is very proximate to avoid these Pin shoulder surfing and device theft.
6) Add behavioural biometrics to pin unlock so that screen tap cadence and other indicators influence the unlock decision or step up auth with Apple Watch.


I could go on.

Finally! This is a big deal for especially micro entrepreneurs, freelancers, taxis and small shops. Soft PoS will transform their lives as PoS currently requires a separate device either old school or android based with GPRS connection that can be flaky. Will be interesting to see how this takes off in countries where local custom or laws demand a paper receipt.

Merchant acquisition of card payments is a huge business with quite tasty processing fees. I think Apple is on to a winner and I love how they keep adding incremental revenue services on a continuous basis. Many small rivers make a large torrent over time.