Peter Thiel: The Age of Apple is Over
Billionaire investor Peter Thiel is a true maverick in the world of tech...
Once referred to as the “Don of the PayPal Mafia,” Thiel has recently gained special notoriety as being the single most prominent figure in Silicon Valley to publicly support now President-elect Donald Trump.
Thiel not only supported Trump’s presidential bid from early in the election cycle, but he did so with vigor at a time when organizations like the Huffington Post were giving opposing candidate Hillary Clinton a 98.2% chance to take the White House. Thiel spoke at the Republican National Convention last year, earning roaring applause after declaring he was “proud to be gay, Republican, and American,” jointly denouncing “fake culture wars” coming from political opponents on the left.
Thiel not only stuck his neck out in an undeniably controversial and hostile political climate, but he put his money where his mouth was, contributing $1.25 million to the then presidential candidate. Thiel faced harsh backlash from other Silicon Valley entrepreneurs due to his support, and people even called to remove him from the board of Facebook, but his allegiance was unwavering.
Regardless of where you stand on Peter Thiel’s political leanings, there’s little denying by now that he is a man of tenacity and grit. Thiel has never been afraid to take risks or to buck the trend, and when everyone else in the room tells him he’s wrong, Thiel won’t hesitate to stand his ground. More often than not, it seems, he’s been able to prove himself right.
Thiel Stirs Up Controversy… Again
Now, Peter Thiel is taking yet another bold and unpopular stance — this time, though, having nothing to do with politics.
In a recent interview with the New York Times, Thiel said something that might just get him in even more hot water amongst his Silicon Valley peers: he has confidently confirmed that “the age of Apple is over.”
Thiel’s comments on Apple were shocking enough to make a few headlines, though he isn’t the first to have made this assertion. In fact, Thiel’s comments mirror a forecast that I and a small number of others have been making for years. That is, that the dominance of Apple remains in question as the iPhone inevitably gets overshadowed by new technology.
As Thiel concisely explains:
We know what a smartphone looks like and does. It’s not the fault of Tim Cook, but it’s not an area where there will be any more innovation.
To this assertion, there’s little denying that Thiel is correct. The iPhone once represented a massive leap from yesterday’s flip phones and personal computers (PCs), but with every new iteration of the device, innovation has become less and less meaningful.
In 2008, Apple released the iOS app store, easily its most significant innovation. For the first time, the app store allowed users to download third-party programs, leveraging the power of a pent-up developer community and opening a world of possibilities for the smartphone. There’s no denying this was a game changer.
Then in 2011, Apple released Siri, the world’s first personal digital assistant (PDA). On one hand, it was a global phenomenon and a taste of AI to come. On the other, Siri’s capabilities have remained limited. Not only is Apple’s famed PDA notoriously hard of hearing, but it isn’t particularly useful beyond setting reminders and asking for directions.
In 2013, the innovations really began to become trivial. We saw a better processor and fingerprint scanner, sure, but the core function of the iPhone remained the same. In 2015, Apple introduced 3D Touch and Apple Pay, which still goes widely unused. In 2016, Apple removed the headphone jack, and marketing chief Phil Schiller touted the change as an act of "courage," only to be mocked by consumers and media outlets alike.
None of this, of course, is to say that Apple is somehow a bad company with outdated technology. As Thiel explains, it’s not Tim Cook’s fault that the “age of Apple” is coming to an end — it’s just that smartphones have approached what we might call "peak innovation," at least from a hardware standpoint.
This idea of peak innovation is nothing new, either. We saw the same thing happen with the PC as incremental improvements gradually became more and more trivial. Just as the iPhone became the answer to stagnancy in the PC industry, there will also be an answer to stagnancy in the smartphone industry — and most people know by now that’s augmented reality.
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The Next Era of Innovation (What Thiel is Really Getting At)
Whether or not this all really means the end of Apple is still unknown. The company has a long history of cannibalizing its own devices in favor of something new. The iPod, for instance, was effectively a martyr to the iPhone. The two devices, while categorically different from each other today, share the very same lineage.
It could very well end up that Apple will make the AR or VR device that overtakes the iPhone. It would likely begin as something similar to the iPhone, but will ultimately be marketed as something entirely new, until one day the term "iPhone" becomes the equivalent of the term "iPod" today.
It’s been no secret that Apple’s competitors have gained AR/VR ambitions in recent years. Microsoft is working on virtual reality headsets with partnering OEMs. It is also building the augmented reality device HoloLens. Facebook purchased VR firm Oculus for $2 billion in 2014, while Samsung, Google, Sony, and HTC have all pursued VR devices as well...
But Apple’s role in the AR/VR space has been mostly ambiguous until recently. We know the company has been recruiting relevant talent and making acquisitions, but it has been hush-hush for some time about its future plans.
Following CES this month, though, rumors began circulating that Apple is indeed working on an augmented reality device — a pair of light glasses, in partnership with German optical systems manufacturer Carl Zeiss. Jointly, a patent (US 9,543,364 B2) has just been granted to Apple for a fully transparent device, which would presumably have augmented reality applications.
Of course, most of what you hear in the Apple rumor mill should be taken with a grain of salt. Apple also has patents for curved and bendable phones. A patent doesn’t necessarily dictate the device will reach the market, or that the design is even feasible yet. Not to mention, the aforementioned patent is dated January 10, 2017. We’re still a long way from making that a reality.
For now, we can only assume that augmented reality designs will continue to rely on LCOS microdisplays. The case for that is especially strong considering Bloomberg reported in November 2016 that Apple had already ordered “small quantities of near-eye displays from one supplier for testing." We're also pretty sure we know who that is.
One day, it’s entirely likely this will change and LCOS displays will be replaced with something better. When that happens, investors will need to respond accordingly. For now, though, there’s only one company Main Street investors can look to in order to reasonably play the VR/AR market.
Until next time,
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