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Apple Inc.'s WWDC 2014 Keynote: What You Need to Know

Apple (NASDAQ: AAPL  ) just wrapped up its annual WWDC opening keynote, which was filled to the brim with announcements, data points, and hints at what the Mac maker has up its secretive sleeve.

Back to the Mac
As usual, Apple kicked things off with various data points on how business is going. The company noted that it continued to grow its share of the PC industry, as its unit volumes over the past year were up 12% while broader PC units fell by 5%. That puts the current Mac installed base at around 80 million. Compare that with the 72 million installed Macs that Apple touted at WWDC 2013.

For some context, Apple has sold 17.3 million Macs over the past four quarters. The timing doesn't line up perfectly with the 8 million more Macs now in use, but it's still safe to say that the majority of those Macs were upgrades or replacements. That speaks to Apple's customer loyalty and its ability to create recurring revenue while the rest of the PC industry suffered severe commoditization (and corresponding pricing pressures) long ago. All the while, that highly loyal customer base is still growing.

OS X Mavericks is currently at 51% adoption within the installed base, compared with Microsoft Windows 8's 14% adoption. Of course, it helps that Mavericks is free and the global installed base is much smaller than Windows.

The next, California-themed version of OS X will be dubbed Yosemite, and this year the real story is a dramatic makeover much like the one that iOS 7 received last year. Apple is revamping the interface with a similarly modern and flat aesthetic, as expected.

OS X Yosemite. Source: Apple.

As with Mavericks, Yosemite will be a free upgrade to users (accompanied by similar accounting deferrals). Headline features include a dramatically improved Spotlight search, changes to the Notification Center, and performance improvements throughout Apple's first-party apps. Apple will also expand iCloud storage functionality with iCloud Drive. OS X will also have deeper ties to iOS with Continuity and Handoff, which allows users to switch between devices.

iOS 8
Apple is billing iOS 8 as the "biggest iOS release ever," in its characteristic hyperbolic terms. Tim Cook noted that iOS has been instrumental to growing Apple's overall customer base, as the company has welcomed 130 million new customers over the past year coming from iOS. Within China, one of Apple's most critical geographic segments, half of users were switching from Google Android.

Apple is introducing a new QuickType feature, which offers predictive type. It learns communication patterns and makes suggestions based on those patterns. The reality here is that Apple is simply catching up with rivals in an area that's long overdue. Android and BlackBerry have long offered predictive type on their devices, and Apple is now up to speed.

Touch ID will now be available for third-party developers to use via a new application programming interface, which has clear implications for a possible mobile payments service in the future.

Two true
Two widely rumored moves turned out true: HealthKit and HomeKit.

The first had been rumored as "Healthbook," but irrespective of name it offers a centralized place for health and fitness apps to aggregate data. Apple highlighted Nike during the presentation, which makes sense given the apparel maker's recent exit from wearable fitness hardware and Cook's presence on its board. Nike's Fuel platform will play nicely with HealthKit.

HomeKit is Apple's answer to the smart home. Of course, the iHome moniker is already taken by the popular iAccessory maker, so Apple had to settle for something else. Surprisingly little time was spent discussing HomeKit, but it will offer a smart home platform for developers to target and allow users to control smart appliances throughout their homes.

Two false
There were also two rumors that didn't pan out. There had been speculation that Apple would introduce real side-by-side multitasking on the iPad, to level the playing field with one of Microsoft Surface's advantages. Such a move could boost productivity and increase enterprise appeal, but it didn't materialize.

Reports had also suggested that some type of hardware announcement was in store, which also didn't happen. So goes the Apple rumor mill. Overall, there were no curve balls or other major surprises. The broader trend within the industry of feature and aesthetic convergence between desktop and mobile operating systems continues.

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Comments from our Foolish Readers

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  • Report this Comment On June 03, 2014, at 7:18 AM, VitamanD wrote:

    It's worth noting that there were some very impressive features which will cut into the use of Dropbox, Skype, and Google search markets. Huge swipes at Google including iHome which is basically just saying to Google "LOL you paid 3 billion for Nest…look we can not only program it but will include it for free as an upgrade". Even though Wall Street will be disappointed that there was not an unveiling of new hardware this operating system will be huge for Apple.

  • Report this Comment On June 03, 2014, at 7:29 AM, alexf wrote:


    Losing money on AAPL for the past 3 years. Has come back a lot but I am still on the red. Back then GOOG and AAPL were both in the mid $650s. One is making me money, the other one, zip.

    I expected a little more from them. This "announcement" does not bring anything exciting to the table. Mr. Market thought so too after the announcement.

    Wow. I could now check my pulse or control the coffee maker. Impressive (not). Productivity items like multitasking? No.

    Predictive type? I have had that in Android for years. <crapple>

  • Report this Comment On June 03, 2014, at 9:15 AM, KombatKarl wrote:

    Even one of my iZombie friends was dumbfounded that they would even bring up predictive typing, as he too knows that the rest of the world has had that for years.

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Leaked: Apple's Next Smart Device
(Warning, it may shock you)
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Evan Niu

Evan is a Senior Technology Specialist at The Motley Fool. He was previously a Senior Trading Specialist at a major discount broker. Evan graduated from the University of Texas at Austin, and is a CFA charterholder.

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