The Apple revolution isn't merely about beautiful products
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Version 0 of 1. We don’t know what we want until we are offered it. But right now there is a group of people in northern California who have the best intuitive grasp of what we might want – and a lot of them work for Apple. As such, Apple’s annual worldwide developers’ conference (WWDC) has become a focus not just for the new products and services Apple itself is bringing to market, but for the direction of the entire industry. This is the place where we learn not so much the way we live now, but the way we may live in a few years’ time. Ultimately, the market will determine what will succeed and what will not, but it cannot exert that power unless the choices are put before people. We can’t buy things that don’t yet exist. So what can we learn from the latest WWDC? From a British perspective, the obviously important new service will be using the latest iPhones, Apple watches and tablets a contactless debit cards: Apple Pay. That will be launched here next month and we will apparently be able to make payments of up to £20 this way. The service has been running for a year in the US but has not been an untrammelled success. As yet, many of the large retail groups there don’t accept it, and Google Wallet seems to have had a slow start too. It may turn out that people would rather use credit and debit cards – particularly since contactless cards have gained traction – than pay with their phone. But London users will be able to pay Tube and bus fares with their phone, just as they can with debit cards, and that may become a new norm. If that happens, the Oyster card may eventually become an intermediate technology, rather like the fax. Other things that Apple aficionados noted included improvements to Siri, which will now be able to make more intuitive, pro-active suggestions; to Apple Music, which will allow you to stream the music you want to hear; and to the news service which (to be a bit unfair) will mean you get the news you want to hear. It looks, too, as though there will be substantial improvements to the Apple Watch, which some people take to mean that it has not been as successful a seller as Apple hoped. All this sounds pretty incremental: tweaks to things that already exist rather than radical, life-changing innovations. People who love Apple products will be bound in yet further to the community, but there was nothing that was going to change the world. However, one thing did stand out. From a developers’ perspective the big announcement was that Swift, the new operating system, would not only be enhanced but also be made open source. This raised the loudest cheer at the WWDC, for it will make it easier for developers to create new apps. This is, after all, the developers’ conference. This is important from a wider economic perspective. The best way to get one’s head round what Apple is doing for the world is to see it as having two separate functions. It designs beautiful products and creates services people want. That is the top-down element of the company and the thing that has driven it to become the world’s most valuable enterprise. But it also creates a platform for people to do their own thing. This is making some people millionaires: Apple paid out more than $10bn (£6.5bn) to developers last year. That is tiny when related to Apple’s total revenues, and a couple of years ago it was calculated that the average developer was receiving only $23,000 a year. But the top-down excellence is now buttressed by bottom-up endeavour. This is probably the best example of the way in which big company/small company relationships have huge implications for economic advance. Large companies are the core drivers of the world economy. If you want to buy a car, feed the family or run your finances, you most likely go to a giant: perhaps Ford, Tesco or HSBC. But nearly all depend on a network of suppliers, which in turn outsource to even smaller ones. It is the miracle of the market economy that it works at all – and sometimes it doesn’t, when large companies make large mistakes. But applying the benefits of the IT revolution to a world where we don’t know what we want until we are offered it is even harder (and much more disruptive) than making cars that people want. The platform that Apple has created is a test bed for clever people to create not just the services that people might want, but ways of making the whole economy function more efficiently. Looking around, there are a host of services that don’t function as well as they might. I happen to think that payment mechanisms are not too bad, but they could clearly be better. Clearly electronic transactions are more efficient than cash, but electronic transactions cost more than they should. We can all think of payment systems that are still pretty clunky: paying for parking for example. But I don’t see this as the part of the forest where revolution will happen. It is much more likely to be in public services, in healthcare and in education. Those are the areas where we need app developers to apply their energies and skills. That is of course already happening, but these things take time. If all this sounds airy-fairy, it shouldn’t. Alfred Marshall, the British economist who died in 1924, observed that it took a long time for any major technical innovation to have its impact on the economy because other subsidiary innovations had to take place before it could be fully exploited. So it was, in his life, with the motor car – you had to have roads, petrol stations, and traffic rules. So it is now with the mobile internet. We should be most grateful to Apple for developing its stuff – but also for creating a platform on which subsidiary innovations can be tested by the world’s consumers. h.mcrae@independent.co.uk |