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    Apple wants a slice of many pies


    Not just big tech, many start-ups too should fear competition from Apple’s new offerings

    By Siddharth Pai

    Apple Inc. just had its much-awaited worldwide developer’s conference (WWDC) earlier this month. Alphabet Inc.’s Google organises a similar event periodically. Like Apple, Google has immense market power due to the proliferation of its Android software, and these companies moves at their developer conferences draw great attention, and, as you will see, consternation.

    These events are used to showcase new software and hardware. At the 2022 WWDC conference, Apple unveiled several big new announcements, allowing us a view into the highly anticipated macOS Ventura for its Mac computers, iOS 16, the M2 Apple developed chip, a new MacBook Air, and several more.

    Apple has announced iOS 16 for its iPhones, and the update brings a totally revamped and customisable set of features. Some observers claim that the updates make the iPhone’s operating system a lot more like Android, since customisability is rather a new development for Apple, whereas Android has always allowed both phone manufacturers as well as users to heavily customise its base software as well as its interfaces.

    Predictably, its Apple watch software now brings more health tracking features like tracking atrial fibrillation and reminders to take your medication on time. Also, its fitness app now comes to all iPhone users; previously it was only available to those who also owned an Apple watch.

    Apple’s own silicon for its laptops and computers—perhaps the company’s most important move in the last few years—has also seen an upgrade from Apple’s in-house M1 processor to a newer processor called the M2.

    And as expected, there are new MacBook versions that come armed with this chip.
    Apple had relied exclusively on Intel silicon until just a couple of years ago. Its move to its own silicon chips to power its laptops has been a large blow to Intel, long considered the world leader in chip manufacturing for PCs and laptops.

    After shifting to its own chips and denting Intel, Apple moved last year to block cross-site tracking with the release of Apple iOS 14.5 last year, and to hand over the choice to the consumer instead of big-tech giants like Facebook (or Meta Platforms).

    Meta Platform’s shares first fell soon after the release of Apple’s software at its WWDC in mid 2021, when it warned that its third quarter (on a calendar year basis) could face significant headwinds to its advertising conversions because of the move. In September thereafter, after an executive at its Facebook subsidiary said that the new privacy changes had caused it to under-report conversions, its shares fell further.

    In February this year, Facebook said that Apple’s app tracking transparency feature would decrease its sales this year by about $10 billion, which is a massive dent by any stretch of the imagination.

    These battles among tech-titans take up the most ink. But Apple is not just taking on other large Big-Tech firms. Its WWDCs can take several start-ups out of business. Let us examine a few that have become endangered after this year’s conference.

    The first that comes to mind will have more impact in the US, but one can reasonably expect that it will make its way elsewhere in the world. This is Apple’s new “Apple Pay Later”, which is not different than many start-ups that try to provide instant credit for impulse purchases online. It is a loan, of course, but is disguised with clever marketing ploys like naming the purchase as a “buy now, pay later” scheme that does not touch your credit cards or bank accounts immediately. Several start-ups have seen this as an opportunity in the US. After a quick credit check and approval, some charge the buyer interest while others do not, but all charge the merchant a juicy 4-6% commission fee for closing the sale.

    Apple simplified this whole process. Customers pay no fees or interest, and only a pay a little now and the rest over the next six weeks. Meanwhile, the business pays no fees, and most importantly, does not need extra payment plug-ins or integration with third party application interfaces. This is a no-brainer for both the customer and the store.

    Meanwhile, Apple has landed another user into its growing Apple Pay, Apple Wallet, Apple Card, and other finance businesses, and at one fell swoop, cut out a bunch of start-ups such as Klarna, Afterpay, Splitit, and Perpay.

    In another innovation revealed this year, Apple has now converted the iPhone to also act as a point-of-sale (POS) device for payments.

    We have seen tap and go credit card machines in India that work much like Apple Pay and Google Pay hardware at merchants in the US and other parts of the globe. However, some merchants—such as a plumber, for example—need to carry such specialised machines with them on house calls if they want to enable their customers to pay on site.

    Until now, this meant that these vendors had to carry an extra piece of hardware with them everywhere in order to allow such payment, which of course is inconvenient for vendors who are always on the go from site to site to provide their services.

    Now, all they need to do is to turn on their “Tap to Pay on iPhone” app and voila, a POS device appears on the phone. In the US, the brands most affected are ones like Square, CloverGo…..and the unfortunately named Toast.

    The author is Technology consultant and venture capitalist
    By invitation

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