Apple Is Taking a Big Risk -- Which Is a Good Thing

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It's very clear what this year's WWDC opening keynote was about for Apple (NASDAQ: AAPL  ) : software and services. While the WWDC presentation usually includes some hardware announcements, software and services were the show stealers today.

Speaking of hardware
On the hardware front, Apple expectedly refreshed its notebook lineup with Intel's (NASDAQ: INTC  ) newest Haswell processors, which will facilitate dramatic improvements in battery life. The new MacBook Airs will sport these new chips, and received some modest bumps in other departments. The external design that's been in place since 2010 remains unchanged.

The same can't be said of the Mac Pro though, which received a major redesign. The Mac Pro had gone neglected for so long that some wondered if Apple was abandoning creative pros. Last year, in an email to a user, Tim Cook teased that Apple had new Mac Pros due out in 2013. Cook had also mentioned that an upcoming Mac would be assembled in the U.S., and we now know he was referring to the Mac Pro.

Mac Pro. Source: Apple.

The new pro desktop is significantly smaller than its predecessor, and packs in Intel's newest Xeon processors. While Apple has adopted NVIDIA graphics throughtout its consumer lineup, the Mac maker is using Advanced Micro Devices in the Mac Pro.

Speaking of software
WWDC being a developer conference, software was the show stealer. Apple has completely redesigned the iOS 7 user interface, ditching the controversial skeuomorphic design philosophy embraced by Steve Jobs and Scott Forstall. Software chief Craig Federighi made several digs at the old approach, saying that there were "no virtual cows harmed in the making of this interface," referring to the faux leather stitching in previous apps.

Apple is moving toward a cleaner, simpler, and more minimalist look to its operating systems that was all facilitated by the executive shakeup last year that left design head Jony Ive in charge of interface. Apple is addressing criticisms that iOS has begun to feel dated in recent times, at a time when Google (NASDAQ: GOOGL  ) has dramatically upped its game with Android's interface design.

iOS 7. Source: Apple.

In fact, the new iOS borrows several aspects from Android, such as the popular gesture of swiping things away to discard them. iOS apps will also now update automatically in the background, something Android already does.

iOS 7 is easily the most important unveiling today, since iOS devices now drive more than 70% of revenue.

OS X is also getting some updates, although Federighi said Apple has "run out of big cats" to name releases after. As such, the company is transitioning toward California-themed monikers, with OS X 10.9 being "Mavericks."

Speaking of services
Even as Google undoubtedly has the lead in mapping, Apple is taking a direct shot on desktop platforms by releasing a Mac client for its Maps service. This comes just a month after Google unveiled a new web-based Google Maps interface at its own I/O developer conference. That wasn't the only shot Apple took at Google: Siri will now integrate directly with Microsoft (NASDAQ: MSFT  ) Bing for search results.

Apple also unveiled iTunes Radio, its long-rumored Pandora (NYSE: P  ) killer. While earlier leaks had suggested there would be some innovative twist to the service, which was why Apple was taking longer than Google with licensing negotiations, iTunes Radio really seems like most other online music-streaming and discovery services available today. Pandora initially dropped on the announcement, but recovered as investors realized maybe the threat isn't as dire as expected.

Risky business
Cook has been talking a lot recently of how Apple's key to success is the intersection of hardware, software, and services. Today's hardware announcements were relatively minor, while the software and services detailed were the meat of the news. iOS 7 is a dramatic overhaul, which inevitably entails an element of risk since Apple's approach to software development differs dramatically from Google's.

Google's strategy is to release constant, smaller updates as it experiments with new ideas and incorporates user feedback. Apple's approach is to make bigger updates less frequently. In that sense, if iOS 7 doesn't resonate well with users, it would probably be a long time before Apple addressed any complaints -- and sales could suffer in the meantime.

One thing's for sure, though: Good riddance to fake green felt.

There's no doubt that Apple is at the center of technology's largest revolution ever, and that longtime shareholders have been handsomely rewarded with over 1,000% gains. However, there is a debate raging as to whether Apple remains a buy. The Motley Fool's senior technology analyst and managing bureau chief, Eric Bleeker, is prepared to fill you in on reasons to buy and sell Apple and the opportunities left for the company (and your portfolio) going forward. To get instant access to his latest thinking on Apple, simply click here now.


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  • Report this Comment On June 10, 2013, at 8:45 PM, prginww wrote:

    One has to wonder if AMD will become the big winner as it steadily replaces nvidia as the main mobile GPU supplier for Apple. Not sure how many android devices use AMD GPUs, but at least some android devices run on Tegra processors.

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