Be honest – who thought Apple Pay would’ve signed up 500 additional banks in about a month? Granted, the rollout may be a few to several weeks longer than Apple’s “end of this year to early next year” timeframe – an NFC initiative of this breadth/scale/card issuer support is pretty big after all, and it’s probably the biggest ever in the US. But remember Apple’s presumably accurate stat that the 11 banks it initially signed up account for 83% of all credit card transaction volume. The other 500? I’m sure it pushes the number closer to 90%, and I’d imagine the debit card transaction volume percentage is in the same ballpark.
500+ bank card issuers and the Big 3 US credit card networks means most major cards will have automatic support for Apple Pay. All the consumer needs to do is get an iPhone 6/Plus, line up the credit card with the camera, and undertake the brutally arduous task of setting up an iTunes account and password, not necessarily in that order. Of course, there are a few hundred million iTunes accounts with credit cards already set up over the years, which helps.
A concluding Apple Pay thought, on the 500 banks (including credit unions, tomato to-mah-to) signed up. Did you notice these bank partnerships on Apple’s semi-redundant slide? (Took me a few replays, but they’re visible – it’s about 6 minutes into the presentation.)
Fifth Third Bancorp (I always wondered about how they got that name) – 17th largest US bank by assets as per WSJ’s September rankings.
Citizens Bank/Financial Group – #18.
BBVA Compass – #29.
First Niagara – #38.
And! Banks like First Data. CyberSource. globalpayments.
Wait a second – those aren’t banks. But…as payment processors, they probably merited mention from Apple considering their integration/alliances (First Data’s being the only one I could readily find). I have no banking/financial background to speak of, but I don’t think you need to have one to make the connection between (A) payment processor working with Apple and (B) faciliating the bank-to-payment processor-to-card network-to-Apple Pay process, right?
Banks who already partner with an Apple Pay payment processing partner? Could well be a reason for the rapid uptake. Maybe the smaller banks are kinda, sorta “included” with the payment processing partnership!
Of course it’s not about Apple Pay revenues, at least not for the foreseeable future. 15 basis points could take a while to impact even the iTunes/software/services revenue category.
The “other stuff”, though? Reach and ecosystem play (including driving sales of Apple Pay-enabled hardware) seem self-evident, even to a humble home gamer like me. It’s gonna be fun to see Apple Pay venture internationally as Apple pushes for NFC adoption in-person, and in-app Apple Pay online. Oh sure, it’ll meet with resistance and competition (people forget about Apple’s competitive spirit sometimes), and it’ll be a marathon. Well, Apple’s built for the long game, and really big gets like UnionPay? Wouldn’t surprise me if Apple announces notable international partnerships sooner than later. Visa, Mastercard and American Express are no lightweights, and it’s not like they’re strictly in the US, after all.
iPad and Apple’s Typical Cold-Blooded Business Decision-Making
Starting from the top to the bottom of Apple’s allegedly “confusing” (just to some) iPad lineup:
iPad Air 2 did its best iPad 2 impression: Thinner, lighter, more powerful, though it also added Touch ID and Apple Pay. Sure, iOS 8 might be “holding iPad back” to the extent Apple has deliberately decided not to “make it more like Yosemite”, and there is that whole “so, is iPad on a slow, no, or negative year-over-year growth arc right now?” thing. But it’s at least a tempting upgrade for iPad 1, iPad 2 and maybe even iPad 3 owners. At certain price points, it’s actually the best iPad value-added update ever, since it’s now $100 less expensive for the 64GB and 128GB storage options (goodbye, $799/$929 price points). Now it’s up to developers to help make iPad Air 2 even more attractive for consumers and the enterprise.
Meanwhile, when comparing to the iPhone 6 series, it’s interesting that Apple’s “overclocked” the A8X to provide “slightly” more claimed CPU delta (40%) and way more claimed GPU delta (250%!) vs. the previous-gen, not-exactly-slow iPad Air. With 3B transistors, Apple is clearly building towards…something. At some point, Apple will pack in enough transistors to drive screen resolutions (though obviously not full-on 3D gaming resolutions) in the 8MP or so range, wouldn’t you think?
iPad mini 3 is the most cold-blooded iOS core product update ever. “$100 for Touch ID and color choices!” Yes, but also no. Don’t forget the $100 price drop at 64GB and 128GB. The “objection” is in Apple’s deviation from its usual “same great form factor, even more power, at the same price!” product update methodology. No A8? No better camera? No form factor change for the third generation? Hey, I’m “disappointed” too. But at the same time, Apple is quite “deviously” using the power of upsell and tension on those torn between portability with built-in security vs. a breathtakingly thin full-size iPad with improved SoC, camera, and screen quality “for just $100 more”.
Worst case scenario, iPad mini 3 somehow causes a high-consumer-sat existing iPad owner to switch to Android or stop buying iPads forever “on principle”. And proclaim the injustices of Apple’s penny-pinching “upgrade” to the skies. Y’know…that doesn’t sound terribly likely. Apple isn’t being “cynical” here in my opinion – it’s just a business decision, one that Apple can change at any point if it feels the need. Let the market decide, as usual. It’ll be interesting to see if we get any hints of clues about iPad mini 3’s relative success in business/enterprise.
iPad mini 2 is a very interesting value product. How much value do you put on Touch ID and 64/128GB storage options? Meanwhile, it’s a mini, but in all other respects it’s as capable as iPad Air 1, just smaller. What do I know, but I suspect iPad mini 2 will do just fine keeping lower-priced smaller-tablet competition at bay.
iPad mini 1 is the bane of many developers, no doubt – why won’t the A5 finally just go away? But Apple clearly sees a place for it, whether it’s emerging markets, some pockets of education, or other industries not requiring 64-bit power and higher-res screens. I’d also note that Apple probably has a reasonably good read on “developer interest” in coding 1024×768 apps, along with the limits to which the poor A5 can reasonably run iOS 8…and probably the presumably-in-development iOS 9 (spoiler alert: iPad mini 1 is at high risk of missing out on certain iOS 9 features, assuming it’s upgradeable). If it’s any solace, at some point next year, A7 or better will become the value baseline for iPad. I think. 😉
So, to massively oversimplify, Apple’s played the “something for everyone” card (apparently, we’ve gone from “not enough choice” to “too much choice”), while holding the 16GB entry-level card, the $130 LTE premium card, and the “run current-gen iPad Air and iPad mini along parallel spec tracks” card (which, interestingly, Apple added back to its hand). Not the playing style of a company particularly concerned that iPad’s losing momentum next year “unless it takes decisive countermeasures now”, is it?
Yes, there’s the issue of Apple “not differentiating” iPad enough, leaving the “somewhat-unrealized” slate of glass to an uncomfortable middle space between PCs and smartphones. Well, at least it’s not being shoehorned into that even more uncomfortable space between PMPs and PCs, right? Let’s get a gauge of developer engagement and leveraging of iOS 8/Swift/Metal technologies before rendering any snap judgments. Your opinion may vary for very good reason, of course.
A premium value product. A very-well-priced 4K+ display with a computer thrown in for no charge! If it can find its way down the cost curve to the rough iMac equivalent of where the 13″ MacBook Pro retina is now…that’s quite the consumer win.
I like that Apple still holds the Mac in such regard – though at a $20B annual clip with steady margins and long-term steady growth, it’s no surprise there’s incentive to keep advancing the line.
The learning going into iMac is fascinating. Optical bonding, plasma deposition, friction-stir welding (first done two years ago). Going to 5K when 4K probably would’ve been just fine…which means consumers can expect a consumer-4K 21.5″ iMac companion somewhere down the road. All kinds of interesting customization, from custom timing controllers, to deep display vendor collaboration, to using existing standards (DisplayPort 1.2, Thunderbolt 2) in apparently non-standard ways to enable 5K resolution (akin to how Apple works with mobile GPUs with desktop-grade thermal constraints and power supply).
Still pulling that string to see if it might lead to an Apple television? I wouldn’t count out the possibility.
No, this quick bit of home gamer commentary isn’t aimed at anyone in particular and certainly not with any “ill will” or whatever – it’s just a recent phrase for a common theme, or themes. Apple’s “slowing down”, basically.
Well, as far as growth, there’s my tinfoil theory of Business Physics™ – which I’ve probably explained one too many times in the past, and am unreasonably proud of due to its apparent modicum of originality phraseology-wise. At least as far as I know. 😛 You’ve also got my prior thoughts on the potentially-quite-sustainable, if not necessarily exciting, yeoman’s/steward’s work of cultivating Apple’s core businesses.
As far as modesty? Er…as a sampling of “What Apple Did
Last This Summer Year” we’ve got:
– Brand new iPhones, in Big and Really Big, with two new display resolutions and one new ppi (~400)
– Apple Pay, with all the effort and negotiation and Touch ID integration and security frameworking and partnering and behind-the-scenes-invisible-to-consumer-engineering that went on
– Secure Element engineering in addition to NFC inclusion
– iPad Air 2
– A8 and A8X development
– Key hires such as Angela Ahrendts, foreshadowing significant changes to worldwide Apple Store and online Retail operations
– Managing the China Mobile rollout
– The Mysterious Apple SIM
– A 14.7MP prosumer desktop computer
– iOS 8, now with Continuity, HomeKit, HealthKit, and Metal
– Yosemite, the first OS X release to “bring iOS and OS X together”
– Swift, which could eventually be the codebase for iOS and OS X
– *cough* Apple Watch *cough*
– which also appears to have a Secure Element onboard
…I fail to see the modesty here. If by that you mean, well this isn’t exactly going to lead Apple to 30% revenue growth in fiscal 2015, you may be right.
And arguably, you’re setting the bar way too high for a company looking to bring in $190-200B or so in revenues next year. Business Physics™, mind you. 😉
Which is not to say Apple’s immune to mistakes – SSL/TLS and other security issues, iOS 8.0.2, GT Advanced, and so on. There’s always things to work on, and considering that list of over a dozen initiatives…Apple had to say “no” to a bunch of things, and was at risk of “stumbling” due to failure to adequately focus on various important matters.
But in the main? It sure looks like Apple has done quite enough to have itself a great 2015, not to mention position itself for continued good prospects far beyond next year.