Podcast, Fireside Chat
a16z Podcast | Apple Takes on Payments and Your Wrist
- Apple plans to evolve iOS to support screen size flexibility previously constrained by app compatibility and targets the Asian market segment with the iPhone 6 Plus to correct the lack of traction seen with the iPhone 5C.
- The $100 cheaper iPhone 5S is expected to perform better in China than the 5C because high-end Chinese consumers are described as non-price sensitive and prefer premium models over plastic alternatives.
- A massive deployment of EMV credit card readers is scheduled for October in the United States, creating the necessary NFC infrastructure to support Apple Pay adoption.
- Apple intends to adopt a unified strategy for Apple Pay adoption by pushing banks and retailers, contrasting this with the market fragmentation that hindered Google, while acknowledging the Japanese model's success with transit and loyalty cards has peculiarities like high cash usage.
- Apple Pay adoption will likely rely on the user experience of Touch ID and NFC, potentially enabled by partnerships sufficient to prime the pump, though it may initially function as a "vitamin" rather than a "painkiller."
- A liability shift occurring in October 2015 will make merchants responsible for losses on fraudulent swipes without EMV or NFC devices, creating an incentive for merchants to adopt these payment methods.
- New capabilities such as instant virtual card issuance for better deals or new cards in 15 seconds are expected once a card is virtualized.
- Apple intends to provide platforms without becoming a giant "octopus" involved in credit card networks, fraud, or credit risk, and will not generate ongoing advertising revenue from iPhone sales.
- HealthKit information will be stored in a repository where apps can request access with permission, while Apple never views the data, distinguishing its model from competitors and its business model from one dependent on user data.
- The Apple Watch is not scheduled to ship until spring and is expected to require nightly charging despite the goal of all-day performance.
- Apple Watch and Android Wear devices are expected to require a connected phone due to the difficulty of housing 3G chips with color screens that last all day in small devices.
- The Apple Watch is positioned as a standalone device with a full UI, similar to Apple TV, but requires an iPhone 6 or iPod 5 to function and will not support Android phones.
- The Apple Watch is designed to make club membership compelling, acting as an accessory to the iPhone which serves as the anchor tenant, a strategy intended to lock users into the ecosystem and drive future iPhone upgrades.
- Consumers are expected to remain on an upgrade treadmill of approximately two years, with the new anchor phone driving the need for other accessories on slightly longer timeframes.
- Apple is not building a unified cloud platform from the bottom up, instead relying on third-party providers like Oracle and Azure for backend services such as email and photos.