[Updated] Apple “Time Flies” Event: Big Services Push, Incremental Improvements to Smartwatches and Tablets

Analytical Summary

Apple With iPhones shipping “a few weeks later” than last year, Apple used its September event to debut two new Apple Watches, two updated iPads, a new fitness subscription service, and three service bundles. Apple is increasing its lead in smartwatches and tablets. The iPad Air is a preview of the power of Apple’s next generation silicon, the loss of the power supply in most Watch boxes foreshadows this change for iPhones as well, and a new Family Setup option opens up new child and senior markets for the Apple Watch without supporting Android directly. The hardware changes are incremental, but incremental change at Apple’s scale has a huge impact. Even so, the new Apple One Service bundles will likely be the have the most impact going forward.

Services

The smartphone market has matured and saturated, and technology for the next computing platform – whether that is AR, ambient computing, or something else – is not ready. In response, Apple has broadened its hardware offerings well beyond Steve Jobs’ four quadrants to hit expanded price points at both ends of the price spectrum, but the bigger move has been expanding into services. Where the App Store was initially intended to break even, in-app purchases have turned the App Store into a material contributor to Apple’s bottom line. In addition to app and media (music, video, and book) sales, Apple also offers subscriptions to online storage (iCloud), streaming music, streaming TV and movies, iOS games, and curated news.

To this group, Apple is now offering Peloton-like live and recorded exercise classes for $10/month, starting in English-speaking countries later this year. The Fitness+ requires an Apple Watch, but does not mandate specific models of fitness equipment across eight exercise types. It remains to be seen whether Apple understands how to run virtual fitness classes, but the pricing significantly undercuts both local classes and streaming competitors like Peloton (see Competition, below).

Apple One bundles its subscription services together at a discounted price, and smartly includes the most necessary and accessible services, storage, music, and games in the base $15/month tier. Heavy users will need more storage than any of these plans offer, and Apple will happily let consumers buy more, but nearly any iPhone owner needs at least a basic iCloud subscription already, and Apple Music has over 60 million users. The $20/month family tier will be a bargain for multi-Apple households, and the Premium tier adds adequate storage (2TB), News+, and Fitness+ to the family plan for another $10.

Apple may lose a little money in the short term – there are certainly plenty of households paying well over these amounts today. Longer term, Apple One will turn more hardware owners into service subscribers, improve adoption of Apple’s secondary services like Apple TV+ and News+, and make Apple’s ecosystem much stickier.

Apple Watch

While Samsung, Huawei, Xiaomi, and Fitbit provide competition, Apple has a commanding lead in smartwatches. The Apple Watch Series 6 makes incremental changes over the Series 5, but incremental changes, at Apple’s scale, to products that save lives, are really meaningful. From that perspective, the lower priced Apple Watch SE is the more exciting announcement because it brings the Watch to more people. The Apple Watch SE is essentially an aluminum Watch Series 5 with an altimeter but without the expensive always-on display.

The Apple Watch SE starts at $279, but the LTE version is only $329 – just a $50 delta for the cellular version – and it can be given to seniors for communication and fall detection thanks to the new Family Setup option. While an iPhone is still required for initial setup, after that it can be used on its own. Family Setup also brings Apple into the kidwatch market, and Apple has parental controls designed for this use case. While a $329 Apple Watch SE is an expensive way to track or communicate with children, it can be a better investment than cheaper alternatives. Apple supports its products for years, so once a child is old enough for a proper phone, the Apple Watch SE can be used as regular smartwatch.

The Apple Watch Series 6 builds on the Series 5 with a brighter always-on display, a new SPO2 sensor, a faster processor, an altimeter, and new colors. Blood oxygen levels are a component of serious fitness management, but if the Watch Series 6 was a medical device, it would be even more useful as a way to monitor COVID-19 symptoms. Apple is testing the Apple Watch Series 6 for this purpose, but, for now, neither regulators nor Apple’s lawyers will suggest that it should be used that way. The new features are nice, but with sleep tracking coming to all modern Apple Watches with WatchOS 7, better battery life or fast charging would be more useful. Even so, the Apple Watch Series 6 is the most advanced, well-rounded smartwatch on the market.

[Update Sept 29: Techsponential has had an Apple Watch Series 6 review unit in for over a week, and I am seeing a roughly — and remarkable — 50% improvement in battery life over the Series 5. Apple did not explicitly promise better battery life, but it is certainly welcome, given the addition of sleep tracking to the software. It does appear that sleep tracking needs to be explicitly enabled in software. After delays due to setup and fit/comfort issues I was able to test the sleep tracking, which focuses on time to bed/rise rather than maximizing deep sleep or REM sleep. It is too early to tell if this approach is better or worse than the rest of the industry. One thing Apple needs to improve: if you sent an alarm within sleep tracking and then think better of it, it is buried many layers deep in the sleep menu and does not show up with other alarms in the Clock app.

The increased brightness of the display is obvious in always-on mode; the Apple Watch Series 6 is now more of an “always watch” without requiring a sharp wrist movement to see the time and key metrics, especially outside.

I have tested the blood oxygen sensor with mixed results; it doesn’t always provide a reading, and when it does, it is not clear how to interpret the data or how to use it. This is not a reason to buy a Series 6 watch. Apple’s insistence that this is not a medical-grade COVID symptom trackers is clear; what is not clear is why Apple would make this a highlight feature of the watch when it is not terribly useful, and not talk about battery life, which is.

One stylistic note: the Blue Aluminum version that Apple sent looks darker and more sophisticated in person than it does in the press photos - as good as Apple’s virtual events are, you definitely lose something by not being able to get hands on with all the products in person.]

Along with the new hardware, Apple announced new stretchy band options and that it is dropping the charger – but not the cord and magnetic charging puck – from most Apple Watch boxes for environmental reasons. This really should not be a big deal; anyone who buys an Apple Watch already has an iPhone which comes with a charger. Unless it doesn’t; it is safe to assume that this move is a precursor to dropping chargers from some iPhones this fall as well, and that will be a problem if Apple does not offer vouchers for chargers for those who need them.

iPad

Apple updated two of its iPad models: the base iPad and the mid-tier iPad Air. The iPad 8th generation retains the same $329 price point, form factor, and Lightning connector, but gains a powerful Apple A12 chipset. This is the second time this year that Apple has put an extremely powerful processor into its lowest priced device. Apple’s control over its silicon continues to pay dividends. While the iPad is still more expensive than cheap Chromebooks for school districts, especially once MDM and software are factored in, Apple wins a lot of purchase decisions at retail. As consumers rush out to buy (or replace) devices for distance learning, a more powerful iPad with a huge ecosystem of accessories at the same price is quite appealing.

[Update Sept 29: Techsponential has been testing the new iPad along with the iPad Smart Keyboard and Pencil. While the bezels, home button, and Lightning connector are somewhat dated, this is still a superb tablet. The performance jump from the 7th generation iPad is not relevant; nobody is going to upgrade from last year’s iPad to move from an A10 to an A12 processor, though it certainly provides longevity peace of mind. To see if consumers with much older iPads would benefit from an upgrade we pulled out an iPad mini 4 from 2015, which has an A8 processor. Apps like Garageband, Excel, and Ticket to Ride loaded in just one or two seconds on the 8th gen iPad vs ten to fifteen seconds on the iPad mini 4. However, after the initial launch, performance differences were less pronounced, even when apps were fully closed and then relaunched.

We still plan to test graphics-heavy games and AR apps to see if the differences there are more pronounced after the app loads, but we just did not find that Apple’s previous silicon performance was a bottleneck with our typical apps. That said, it is ridiculous that Apple can put this much power in a product priced like a netbook.

We were not impressed with the mushy key travel on the Smart Keyboard, and the higher end iPad Pro/Pencil combination offers better latency for drawing and note-taking. ]

The iPad Air gets a $100 price bump to $599, but it now edges into iPad Pro territory. There will likely be some cannibalization, but Apple also probably does not care that much which premium iPad a consumer buys, and the iPad Pro will eventually get upgraded as well. The 10.2” display does not have a 120Hz refresh rate and there are a few other upgrades on the 11” Pro, but the new iPad Air gets a USB-C port and design refresh. The biggest performance bump comes from Apple’s latest SoC: the A14 Bionic, which is an astonishing 40% faster than the A13. We are likely to get more details on performance when Apple provides details on the next iPhones, but this should be considered a preview of the type of power that Apple Silicon Macs should get by the end of the year.

Competition

Services

Spotify has already raised antitrust concerns with the European Union, and the launch of Apple One has the company apoplectic. Spotify has more music subscribers than Apple does, but the Apple One bundles are attractive, and should help Apple compete. Peloton is taking a different approach, welcoming Apple Fitness+ with a tweet, “Friendly competition is in our DNA. Welcome to the world of digital fitness, @Apple” that is a clear throwback to Apple’s own “Welcome IBM. Seriously.” ad from 1981. Peloton’s tightly integrated – and beloved – equipment, service, and instructors should remain a differentiated offering even after Apple Fitness+ launches. However, Peloton is extremely expensive, and if Apple Fitness+ is any good, it will limit Peloton’s ability to move down market.

Smartwatches

Apple is not alone in offering watches with SPO2 monitoring; Withings and Samsung can do that, too. Samsung is also beating Apple to market with blood pressure monitoring, and the Galaxy Watch has a terrific user interface that is easier to use than the Apple Watch in a few respects (it is much easier to find and launch apps, for example). Still, the Apple Watch is the leader for a reason: it is the only watch that can deeply integrate iOS notifications, it has the simplest basic fitness monitoring, and it is small and stylish. The $199 Apple Watch Series 3 remains on the market to compete against fitness bands, but the addition of the much more attractive Apple Watch SE adds price pressure to competitors’ smartphones.

Tablets

Samsung, Huawei, and Microsoft have tablets with competitive hardware – up to a point, as nobody can touch Apple’s A14 Bionic processor. But at least at the Pro level, software and workflow matter as much as raw power. Apple wins a lot of these battles, too, but so does Microsoft. At the entry level, Apple’s lead is unquestioned no matter what criteria you use: tablet-specific apps, performance, or accessories; the latest updates simply put Apple farther ahead. Chromebooks can still win for education – particularly for school districts, where cost, MDM, and integrated keyboards overshadow everything else.

One More Thing

Finally, a quick note on the event itself: like all vendors, Apple is stuck doing virtual events, but it has adopted a style of its own. The Time Flies Event used the same techniques as the WWDC keynote: all segments were prerecorded, but high energy from the presenters and quick drone flights around Apple’s campus in between each segment made it seem alive, even if it wasn’t actually live.

To discuss the implications of this report on your business, product, or investment strategies, contact Techsponential at avi@techsponential.com or +1 (201) 677-8284.

First published Sept 18, 2020
Updated September 23, 2020 with hands-on experience with an Apple Watch Series 6 review unit.
Updated September 29, 2020 with additional Apple Watch 6 experience and iPad 8th generation hands-on time.