One of the questions that I ponder upon often is when would the majority of the population stop carrying their mobile phones. Will it be replaced by some other mainstream device and when?. The Apple Watch, for example, does let you leave your phone at home to some extent. It might be possible that such a change would never happen like in the case of the television. It just got upgrades and never left our homes.

Trend inversions are not new in the digital world. The video streaming vs DVD rental market is one such example. The move from HTTP to HTTPS, Spotify vs buying songs maybe some others. While the move from feature phones to smartphones might not be called one since it was more of an upgrade than a shift.

It is interesting to go through the Apple Q3 ‘20 earnings documents. Even in a quarter where almost everyone was confined to home, Apple has seen a significant increase in the wearables and accessories segment. With almost no growth in iPhone, Mac, or iPad revenues Quarter-on-quarter, wearables and services are the key drivers for Apple in the immediate future. Apple is rumored to be working on Apple glass too, with some groundbreaking Augmented Reality features in a mainstream product (if the reports are to be believed.) The early versions of Apple Glass are expected to offload some computation to the iPhone, which might make some of the older models incompatible, forcing people to upgrade and further driving some sales of newer phones.

There is no compelling reason for people to upgrade their phones today. The basic features are more or less the same since the last half-decade. Some of the companies are providing extended software support so upgrades due to lack of software and security updates are going out of the window. You could get a dying battery replaced for a fraction of the cost of what it costs to buy a new phone. The camera upgrades are incremental except for possibly the flagship models.

Back to the question of if and when do we see the wearables segment competing with the iPhone revenues? If something like an Apple glass is launched, it might just make the wearables segment the second-highest revenue source for Apple in the next 2-3 years, below the iPhone. Assuming conservative pricing of say USD 500 and an Apple Watch like shipments, we are looking at an estimated 4 billion USD in revenue contribution in the first year itself.

Changes in the media landscape

There is another inversion happening. The New York Times for the first time has its revenue from online exceed print revenues the last quarter. While the ad revenues declined, the digital subscriptions have seen an increase. This comes at a critical juncture in the media industry where some significant changes happening. Companies have started to realize that they cannot afford to solely depend on ad revenues if they have to sustain and thrive. The newer generation is possibly more forthcoming with digital subscriptions, given that the habit has already formed with Netflix and App store subscriptions. An interesting side effect that was pointed out this week is that all the reputed sources are going behind a paywall, leaving only sources of fake news as the media that the general population can consume for free. At the same time, we are seeing a rise of Citizen journalists. Anyone who can write on a niche topic can have a following and potentially replace a part or full source of their income. An extreme scenario would be that newsrooms might just see a Craiglist-style unbundling with existing expert employees leaving and forming their small publications on platforms like Substack. Journalists do not remain the sole carriers of well-researched writing or news anymore. Alternate forms of media like podcasts are seeing mass adoption. A well-known name in the space, Joe Rogan recently got a 100 million dollar exclusivity deal with Spotify, which might have seemed ridiculous a decade ago. Netflix is going out with a boatload of money after creators, transforming into a content generation factory (though not the best quality). Before Tiktok’s ban problems, it was downloaded 100 Million times in the one month after a series of lockdowns across the world towards the end of March. Multi-lingual content has been poised to be the next big thing in countries like India for a long time, with things starting to look good for the first time. It is interesting to note that there are unicorn media platform companies in China that most of us have not even heard of.

COVID-19 and possibilities

COVID has brought back the question of the utility of a college degree in the current scenario. It makes little sense to stream undergrad content from your university paying 50,000 USD if an equivalent education can be achieved from MOOC platforms like Coursera for almost negligible amount comparatively. With a lot of companies going remote-first permanently, the savings from time to commute might see some changes in parent-kids interaction. As the initial hullabaloo over work from home gives way to stability, it would be interesting to see if there will be any significant changes in homeschooling numbers. A far fetched possibility would be a larger number of people adopting a nomadic lifestyle with some countries like Barbados already announcing a one-year Welcome stamp that allows people to work from the country for a payment of 2000 USD.

Other things that matter

Anthony Levandowski has been sentenced to 18 months in prison for stealing trade secrets of Waymo’s self-driving car efforts, possibly being used at Uber. TikTok is running out of time to sell its operations in the US, with the 45 days deadline coming soon. While TikTok is scrambling for a sale, even talking to Twitter, Facebook has launched a TikTok clone as a feature on Instagram called Reels. As if the competition from AMD and recent restructuring was not enough, someone has leaked some of Intel’s confidential IP and related documents.

The Apple glass early-render image has been used from this link. Let us meet again next weekend.

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