INDUSTRY FOCUS // Tech // 06-05-2015

The Apple (AAPL 0.52%) Worldwide Developers Conference (WWDC) 2015 kicks off on Monday so we phoned our Apple expert, Evan Niu, to learn what we should expect from this event.

WWDC will take place in San Francisco and will feature more than 100 technical sessions covered by over 1,000 Apple engineers, hands-on labs, and the Apple Design Awards.

With Google (GOOG -1.96%) (GOOGL -1.97%) and Microsoft (MSFT -2.45%) offering more streamlined capabilities for multi-tasking, Apple might be hot on their heels. And although we have yet to see the next big product, Apple seems to be hard at work creating products and languages that will give consumers exactly what they've been asking for. 

A full transcript follows the video.

Sean O'Reilly: We're talking about Apple's worldwide developer's conference on this tech edition of Industry Focus.

[INTRO]

Greetings, Fools! I am Sean O'Reilly joining you here from Alexandria, Virginia, just south of the nation's capital at Fool headquarters. I am joined today with the one and only Evan Niu. How are you today, man?

Evan Niu: I'm doing well.

O'Reilly: Long time no chat. If anybody doesn't know, he is one of our top writers, but he lives in the Mile High City of Denver, Colorado. How's it going out there?

Niu: It's kind of rainy and wet. It's been raining for a month straight.

O'Reilly: That's kind of how it happens, as I understand it. You guys, and Seattle. So, you are -- I don't know. You and I have known each other for about a year and a half now and this whole time you've been pretty much -- in my mind -- the king of Apple. So, I'm actually really excited to do this because I remember you and Aaron used to do Apple shows all the time and stuff.

Niu: Oh, yeah. Back in the day.

O'Reilly: So, Apple's developer's conference is coming up. Obviously all the big tech names have their own conferences. Google, Microsoft; they all have their own developer's conference where they invite all the programmers of the world to their little conference. I wanted to get your take on what we could expect at Apple.

Niu: Yes. Apple's starts next week and I think, naturally, the big headliners for the developer conference are going to be software. Specifically this time I think Apple will outline all the major features that people can expect for its main platform -- its operating system's iOS and OS X. Both platforms are pretty mature at this point, but Apple has really been focusing on catching up with Android in certain key areas for iOS.

Things that people have really been asking for, they've been really trying to address some of these gaps. So, they've been really prioritizing, and innovating iOS9, which makes sense because iOS drives over 75% of Apple's revenue and relatively speaking, it's younger than OS X. So, there's a lot more work to do also, on that front.

O'Reilly: So, when you're saying they want to play catchup with Android, is it the adaptability of Android, or what? What's the gap there?

Niu: Just for example, last year, for iOS8 they closed a lot of big gaps like the accessibility feature that they brought, which allows us to really communicate with each other a lot better. That was something that had been in Android for a long time. So, things like browser extensions, a lot of these types of features that people thought were superior that Android had and people wanted Apple to do. It just took them some time to do it in a way that they felt was right and secure and didn't compromise the experience or security or anything like that.

O'Reilly: Got it. So, I'm pretty sure both of us are proud Apple iPhone owners. What can you and I expect from iOS9 when it comes out?

Niu: I don't think there's going to be any huge, major groundbreaking features this year. At the same time...

O'Reilly: Siri isn't going to start doing my laundry?

Niu: Right. That's for iOS10.

O'Reilly: Awesome. I can't wait.

Niu: But I do think that they will have some important things. Nothing that groundbreaking, but still some notable things like, for example, I think they're going to be working on public transit directions and Apple Maps, which has been a pretty important missing piece of the mapping puzzle that Google has long provided. But they gave that up when they switched to Apple Maps. They've been making some acquisitions.

They bought Embark one or two years ago which is one of those apps that specializes in public transit. So, it's just a matter of time before they integrated into Apple Maps. I think that's a feature that people -- particularly in urban areas -- really rely on to get around for their commute.

O'Reilly: Yeah. I actually had to download a local metro app to get train schedules and everything for getting into the district. It is not a part of my Apple Maps at all.

Niu: Exactly. Right now you have to either use Google Maps -- which still provides them very well -- or download a local, third party alternative. Apple obviously wants you to use their own thing.

O'Reilly: Yeah, no kidding.

Niu: Then there' this new proactive feature that's been reportedly working on. It's a lot like Google Now, where the system will proactively deliver information based on user data. So, that's the only thing that's going to be introduced. Maybe some force touch support. Force touch was their new pressure sensitive interface that they introduced in Apple Watch, but they're starting to roll out through other products also.

So, I think they're probably going to include support for that in iOS9, which would be a precursor to the next iPhone having force touch as well. But the biggest thing I'm looking forward to is the possible addition of them adding split screen, multi-tasking with the iPad.

O'Reilly: Oh, man. Is this going to be compared to what Microsoft's planning where your phone could theoretically be your PC and you just drop it down there and you've got multiple screens and everything?

Niu: No, I don't think Apple's going to do anything like that because they've always had this clear distinction between the desktop platform and the mobile platform. They haven't had this -- there's been a lot of feature conversion where they've had different features that borrowed from each other -- but they've been very distinct. They're not trying to converge the two platforms into one, which is what Microsoft's trying to do by having Windows 10 do everything for all devices.

So, I don't think they're going down that road, necessarily. At the same time, Microsoft has had split screen, multi-tasking with Surface. That's something that Apple doesn't have. I think they might be able to close that gap and get on with what Microsoft has been doing because I think split screen, multi-tasking is pretty important because quite literally, from day one, Apple's been fighting this perception that the iPad is purely a consumption device. They've been focusing so heavily recently on emphasizing the iPad as a productivity device.

O'Reilly: Yeah. What does Tim Cook say? Everybody should use an iPad, or something?

Niu: Yeah. Tim Cook's like "I use only an iPad for my work."

O'Reilly: Well, of course you do. You're the CEO of Apple.

Niu: Yeah. But split screen, multi-tasking is such a core prerequisite for productivity and I think the two main reasons why they don't want to enable productivity are: A) it allows consumers to potentially replace the laptops with an iPad; and 2) it dramatically increases the appeal of the enterprise.

O'Reilly: So, are we talking about having a Mac desktop and then off to the side next to the screen I'm going to have my iPad on a stand, and then I could drag spreadsheets in between the two? What are we looking at?

Niu: So, split-screen multi-tasking would be more of, on the iPad you could look at two, potentially three apps, side by side at the same time. So, you'd have Safari on one side, then your email on the other, and you can type an email while you're -- because right now, it's just one app at a time.

O'Reilly: Right, and you can only -- yeah.

Niu: You could switch between the two, but it's not -- people are used to a laptop where you can have four windows open at the same time and you can really multi-task in a much more efficient way. That's something people have been saying that Apple -- and that's something that Microsoft does with Surface. They have the apps to half the screen, or 1/3 of the screen. Apple was reportedly trying to have this out last year, but I guess it probably wasn't ready yet.

That all ties into the iPad Pro rumor that we've been hearing about that maybe they have a bigger iPad. Because bigger iPad, more screen, real state, better multi-tasking.

O'Reilly: Good for professionals.

Niu: Right.

O'Reilly: Yeah. That's interesting, because up until this point the iPad feels like a big iPhone.

Niu: Right.

O'Reilly: That's cool. Okay. Very good. So, moving on, I'm actually curious about what you think about this because you've got guys like Jay-Z trying to get in on the streaming music business and all this stuff. What are they going to do with a new streaming service? They just bought Beats. What's their evil scheme here?

Niu: It sounds like -- based on some of the reports we've been seeing -- they're going to be having a $10 per month subscription service, unlimited access -- which is similar to what Spotify does. But on top of that they're going to have a big emphasis on curation. They've talked about why they bought Beats Music. One of the reasons why they liked it so much was all of the curation that they had.

For example: right now, Trent Reznor of Nine Inch Nails is in charge of Apple's curation team -- which is kind of a funny turn of events. You never would have thought the Nine Inch Nails guy would go work for Apple, but there he is.

O'Reilly: It's a brave new world.

Niu: Yeah. It just happened to play out that way. Also, you have big names like Drake and Pharrell that might be involved as guest DJs to help curation. I think it's going to be hard to say how important curation is going to be to consumers, and whether or not it's going to be this differentiating feature. Certainly Pandora (P) has their curated radio station algorithm and stuff like that. I think that Apple thinks that more of a human element can set it apart, and that's why they like Beats so much.

That's one of the things they liked about Beats. I'm interested in hearing more about it. I'm not so sure that it's going to be a huge, major financial game changer.

O'Reilly: Major driver, yeah.

Niu: Right. At the same time they do need to adapt with the times and consumers are changing pretty rapidly from going toward the streaming model, as opposed to the old models where you buy your music.

O'Reilly: Yeah. Apple revolutionized -- arguably they kind of saved the music industry -- but I can't remember the last time I paid $1.09 on iTunes. I just stream stuff on YouTube, or whatever.

Niu: Yeah. That's what everyone does now. There are obviously a lot of other debates about the economic viability of the model itself as it relates to artists and all that, but on the consumer side of it, people are really digging this whole new streaming access model.

O'Reilly: It almost seems like just paying a monthly fee is the only way that everybody can semi-win. We shall see.

Niu: Yeah. I remember Steve Jobs specifically saying he hated the streaming model. A long time ago. He was like "These companies end up raising prices, and then eventually you're face with this choice. Do I stop paying and lose access to all my music? But I have to keep paying higher and higher prices."

O'Reilly: All that.

Niu: Again, you can't really ignore the consumer shift that's happening right now.

O'Reilly: No. Jobs was good, but he also didn't think people wanted giant phones, and here we are with the iPhone Plus.

Niu: Yeah, that's true.

O'Reilly: So, I actually...

Niu: Or small tablets.

O'Reilly: Yeah, or giant tablets. So, I've been hearing this rumor for the last 10 years about the Apple TV. Now it seems like we're not going to get it. They've got a set top box, are they ever going to do this thing? It seems like there's theoretically an opening there for them to have -- you go home, you've got your Apple TV, your Mac, you got your iPhone; everything's seamless, everything's connected. Why don't they do that? What are they thinking now?

Niu: Are you talking about the rumor that they're going to have a new set top box, or a full sized TV?

O'Reilly: The TV was supposedly a rumor a couple of months ago, now that seems to be dying. Are they coming out with a new set top box just to placate that rumor? What's going on?

Niu: I don't think that they're working on a full sized TV anymore. Supposedly they killed that project a while back, but there have been talks that they're going to have a new set top box, alongside a new subscription TV service. It makes a lot of sense because the current set top box was three years old, and they recently dropped the price to $70. So, it's a good time to refresh that one because it's just so old.

But there was a recent New York Times article that suggested that it wasn't ready yet. So, thy might not announce it because there had been this expectation that maybe they're going to do it. I actually suspect that report could be one of those instances of Apple having a controlled leak, very specifically, to set expectations that it's not ready. It might need more time to put some of the finishing touches on.

At the end of the day, if they do push a new Apple TV back a couple months into the fall, they have announced tons of products in the fall anyway, right? So, it wouldn't really hurt if they just needed some more time to work on it, push it back a couple of months. I don't think it would be the end of the world if we had to wait a little bit longer. But I'm sure that they are working on one, and it sounds pretty promising.

O'Reilly: Very cool. Well, before we go, I wanted to ask you your quick thoughts. I just found out the other day about how Apple basically made this new programming language to work with iOS called Swift. Obviously they names it after Taylor Swift.

Niu: Yeah, obviously.

O'Reilly: Yeah. The growth has been unprecedented. People have been adopting it way more quickly than previous languages. Are all these developers just going to go worship at the altar of Apple for making this new language? How happy is everybody?

Niu: From my understanding -- I've talked to a few developers just about the implications -- and it really is just a much more powerful language. The current one, the outgoing one that everyone's using was Objective C and that's an older language. The learning curve is much steeper. Especially if you're talking about a new developer coming brand new, Swift is just much easier to learn, it's much faster at performance, it's all about making life easier for developers.

It's really optimized around Apple's new 64 bit architecture. They love it, and I think it has a lot of promising potential behind the scenes. It's not something that consumers are going to really focus on, or appreciate beyond just having better apps, more apps, and faster apps. But, on the developer they love it.

O'Reilly: It's a good time to be a computer programmer.

Niu: Right. Apple really wants to make your life easier.

O'Reilly: For sure. Very good. Well thank you for your thoughts, Evan. Have a great day.

Niu: Yeah. Good to chat a little bit.

O'Reilly: Yep. Do it again soon. That is it for us, Fools. But before we go, I want to make our listeners aware of a very special offer for all Industry Focus listeners. If you found this discussion informative and you're looking for more Foolish stock ideas, Stock Advisor may be the service for you. It is our flagship newsletter started more than 10 years ago by Motley Fool co-founders Tom and David Gardner. We're offering our lowest price out there for all of our Industry Focus listeners. It is $98 for two a two year subscription to Stock Advisor.

You will get two stock recommendations every month with insight from our team of analysts. Just go to focus.fool.com to take advantage of that deal. Once again that is focus.fool.com. As always, people on this program may have interests in the stocks that they talk about, and the Motley Fool may have formal recommendations for or against those stocks. So, don't buy or sell anything based solely on what you hear on this program. For Evan Niu, I am Sean O'Reilly. Thanks for listening, and Fool on!

You will get two stock recommendations every month with insight from our team of analysts. Just go to focus.fool.com to take advantage of that deal. Once again that is focus.fool.com. As always, people on this program may have interests in the stocks that they talk about, and the Motley Fool may have formal recommendations for or against those stocks. So, don't buy or sell anything based solely on what you hear on this program. For Evan Niu, I am Sean O'Reilly. Thanks for listening, and Fool on!