When Apple (AAPL +0.17%) announced the new iPhone 6 and Apple Watch on Sept. 9 most of the world's reaction was focused on how those products would change the tech landscape. Could the larger screen on the iPhone 6 dent Samsung's momentum in the large screen smartphone market and could the Apple Watch be the revolutionary, market shaping product Apple hopes it can be?
The reaction was understandable given how important both products are for Apple but hidden in the announcements were three features that I think will be equally important for Apple's shareholders long-term.
Apple Watch has already been hotly debated in the media but it may be a key to three new features the company is releasing. Image source: Apple.
HomeKit
When the iPhone was first released in 2007, a large part of it success was due to the fact that it that allowed us to shed multiple devices for one, compact device with a multitude of capabilities. The iPhone replaced the cell phone, camera, MP3 player, remote controls, and much more. And it also brought innovation from developers who tied new products to this app powered, connected device. HomeKit could have a similar impact on devices within the home.
The development of HomeKit may not seem revolutionary on the surface but it could make similar inroads in simplifying a growing number of connected devices in the home. Today, garage door openers, thermostats, security systems, lights, and more are beginning to be powered with apps on an iPhone but they're often controlled separately, making for cumbersome interfacing with multiple devices. What HomeKit will do is bring control of these apps into a single control panel, simplifying the user experience.
Apple's new line of iPhones will come with an operating system that will eventually include home, health, and payment apps. Image source: Apple.
This may seem like just an app aggregator and in many ways it is, but as home systems get more complicated it will be convenient to be able to make sure lights are turned off, the security system is on, and the air conditioning is turned down with the touch of a button. If devices are also tied to the operating system on the iPhone it will also give users an incentive to stay with Apple's operating system instead of reconfiguring the entire house. This stickiness of HomeKit and the surrounding app ecosystem can't be understated.
Apple HealthKit
Where HomeKit brings third party home apps into one control screen, the HealthKit for developers and Health app will aggregate and even create health data based on the iPhone 6's accelerometer, GPS, and barometer, which will measure activity and elevation change. iOS 8 also includes APIs that can be used by third party apps to be incorporated into your Health app, opening up a world of possibilities for the health care industry and app developers.
Don't discount the impact that having Epic Systems on board with HealthKit will mean to Apple. The company is the medical industry's leader in database services, including patient records and billing, so they're a key to opening up the maze of personal health care data. The Health app could allow patients to access their records via MyChart, pay bills, and even get in touch with doctors, all with the help of Epic.
We don't know exactly how HealthKit or the Health app will play out long-term but the fact that Apple is trying to make health information more accessible in a single location is a step in the right direction. Even the thought of having greater access to exercise, nutrition, and medical data is something that puts Apple ahead of its competitors in the health care space.
If Apple can take even a small piece of the payments industry it could be a major financial windfall for investors. Image source: Apple.
Apple Pay
One product that is getting some attention post-event is Apple Pay, which is the new payment system from Apple. Instead of completely upending the entrenched payment networks, Apple partnered with Visa, MasterCard, and American Express as well as some of the biggest banks and retailers in the country for Apple Pay's launch. While most of the attention during Apple's presentation went to Touch ID enabled NFC payment solutions I think it's the online element that will be a game changer for Apple and consumers.
One of the drawbacks of making purchases online has always been entering credit card information (particularly on mobile devices) or allowing retailers to store your payment information online. Apple has made it simple to pay with a credit card you have on file with them by choosing Apple Pay and using Touch ID to securely complete your purchase.
Apple already has one of the easiest payment systems with iTunes and the App Store and they're essentially just bringing that simplicity to other retailers.
For Apple's investors, the impact is unknown but early reports are that Apple will take a small cut of each transaction. Even a tiny percentage is a huge opportunity considering Visa, MasterCard, and American Express processed nearly $4 trillion in transactions last year in the U.S. PayPay and Square beware.
Expanding the Apple Ecosystem
As Apple becomes more things to more people it expands the reach of its ecosystem, ensuring users will upgrade to new devices every few years. That's what makes the Apple profit machine work and HomeKit, HealthKit, and Apple Pay are three under appreciated new components of that ecosystem.
If Apple can launch these three new features effectively it could change the game in the connected home, health, and payments. Those are three big industries to tackle and investors shouldn't underestimate the potential impact it will have on profits long-term.
