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USAToday Columns
TECHnalysis Research president Bob O'Donnell writes a regular column in the Tech section of USAToday.com approximately once every two weeks and those columns are posted here. These columns are also often reposted on other sites, including MSN and other publishing partners of USAToday.


February 17, 2017
Apple's transformation from bear to bull

By Bob O'Donnell

FOSTER CITY, Calif. — After struggling through a difficult 2016, Apple seems poised for a turnaround in 2017. At least, Wall St. thinks so: The company’s stock price has seen an impressive rise over the last several days.

While it’s often difficult to decipher exactly why these stock gyrations occur, there are several reasons that have been cited for these recent moves, some of which seem to reflect a new attitude in the company’s approach to working with others in the tech industry.

First, on a technical pricing level, there are many who have felt that the company has been undervalued, at least in relation to other similar ones. Many tech companies trade at 15 to 16 times their annual revenues, but Apple had been closer to 12 times before the recent stock price run-up. Billionaire investor Warren Buffett's firm, Berkshire Hathaway, significantly raised its stake in Apple last year in a testament to the stock's appeal. Apple shares are hovering near an all-time high.

From a product perspective, the big news for 2017 is the tenth anniversary of the iPhone, which continues to represent about two-thirds of Apple’s revenue, and is expected to deliver a positive bump to the company’s bottom line this year.

While final details won’t be known until the fall, when the company formally unveils the iPhone 8 or iPhone X or whatever name they choose to give it, there are enough supply chain rumors to suggest it will be a nice, though not necessarily industry-leading, device.

At least some models of the new iPhone (there could be as many as three different versions according to reports) are expected to have a very bright, color-rich OLED screen, possibly with curved edges, wireless charging, and a fingerprint scanning-capable Home button that’s built into the screen. By getting rid of the space below the screen currently required for the Home button, the new iPhone design could allow either slightly smaller phones with the same screen sizes, or slightly bigger screens on phones that are the same size as current models.

While these are nice advancements, owners of current Samsung and other leading Android-based phones will be quick to point out that they’ve had these features for more than a year already. The difference, of course, is that they don’t run iOS, which continues to be Apple’s key differentiator.

What is new for Apple, however, is that with these future iPhones, the company seems to be a bit more willing to use existing tech standards than trying to create their own. This more standards-friendly approach arguably started with last fall’s launch of new MacBooks, which feature several standard USB C type ports. On the new iPhones, Apple is expected to use wireless charging technology based on Qi, which is managed by the Wireless Power Consortium, an industry standards group that Apple recently joined.

For some, this may not seem like a big deal, but given Apple’s previously dismissive attitude towards many other industry standards (and the potential confusion it would have caused had they chosen a proprietary wireless charging option), it actually is important.

The truth is, Apple’s size and influence can make or break standards, often to the chagrin of those companies and industry associations trying to promulgate these efforts. If Apple is more willing to join in — and to be fair, supporting a few standards doesn’t necessarily imply a complete change of approach by the tech behemoth — then the tech industry as a whole, and arguably Apple as well, could serve to benefit.

Why (or how) you ask? We’ve reached a stage in the tech industry’s evolution where advancements for individual product categories, such as smartphones, have slowed, but plenty of potential progress can be still be made when connecting across product categories and services. In order to achieve that, however, there has to be more progress on solid, industry-wide (and that includes Apple) standards for big picture items like digital identity and authentication, as well as more basic technologies like smart home networking and wireless charging.

Creating and agreeing upon these kinds of standards can enable lots of critical innovations around everything from peripheral devices to more widespread usage of digital services, all of which are going to be key to Apple’s future growth.

While Apple is rightly proud of its large customer base, limiting themselves to selling more goods and services to just that loyal base, as opposed to the much wider world of people who own lots of non-Apple devices (and maybe an Apple device or two), would seem to impede their possible future growth. Driving the creation of (or supporting) more industry standards, on the other hand, offers much greater long-term potential, and will be essential if they want to reach this wider group of potential customers.

By starting to “think different” about how they approach key tech standards, Apple could indeed be entering an exciting new phase of growth.

Here’s a link to the column: http://www.usatoday.com/story/tech/columnist/2017/02/17/apples-transformation-bear-bull/98038518/


USA TODAY columnist Bob O'Donnell is the president and chief analyst of TECHnalysis Research, a market research and consulting firm that provides strategic consulting and market research services to the technology industry and professional financial community. His clients are major technology firms including Microsoft, HP, Dell, and Qualcomm. You can follow him on Twitter @bobodtech.