Earlier this month, Bloomberg’s Mark Gurman reported that Apple scaled back its plans to launch a new Health+ service and rethought its entire health and fitness strategy.
While this could be seen as another sign of Apple’s troubles, as the company is currently mired in an ongoing narrative about its inability to deliver on the AI features it promised nearly two years ago, I choose to see it as the opposite: a promising early sign that Apple executives realize that its headlong rush to chase service revenue may be too costly.
The unlikely hero in it all? Apple’s head of service himself, Eddy Cue.
That’s not good enough
At the end of last year, following the departure of former Apple COO Jeff Williams, Cue took over Apple’s health division. Although Cue has been with Apple for a very long time, he was new to this group and it seems to have made a difference. A new leader comes without an ego invested in the path the group has taken, making it easier to see things fresh and not be afraid to make changes.
Cue saw the team hard at work on the new Health+ service, which offered AI-powered coaching features using data from Apple Health. His response seems to have been that even for a man whose job it is to grow and maintain Apple’s services business, the service being built wasn’t compelling enough to launch.
But I think it goes deeper than that: The App Store has several apps that mine Apple Health data to generate AI-enhanced health information. What might have seemed like an add-on feature a few years ago feels more like table stakes for Apple’s own Health app these days. And according to Gurman, Cue requested that many of the features being built for Health+ be incorporated into the Health app.
It’s not Sherlocking
Is it wrong for Apple to look at other apps in the app store like Athlytic and realize that its basic core device functionality is missing? This is a classic “Sherlocking” argument, but I disagree with it. There is a basic level of functionality that Apple should provide each the device it sells.
Apple’s brand promise is that it sells nice stuff – in many cases a bit more expensive than the competition, but you get better quality for what you pay for. This requires the level of basic functionality that comes with the device you are purchasing. Right now, when it comes to health and fitness, Apple is in danger of creating the impression that users have to buy an iPhone and Apple Watch and then subscribe to a service (either from Apple or a third party) to pay off.
Apple needs to make its core offering with the Health app more robust instead of bundling the feature into a paid service.
Apple
Cue’s decisions seem to reflect this worldview. Apple services and of course 3rd party app developer services should exist to increase the level of experience at the base level. Indie app developers are always aware that Apple might swoop in and stomp on their apps, and the wise ones realize that Apple is much more concerned with satisfying the general public, leaving room for apps and services that cater to more sophisticated or focused users. It’s always been that way.
Right now, Apple Health doesn’t feel cutting edge. It feels like an empty shell, full of data but no intelligence to explain what the data means. I realize that health information is complex and highly regulated in most of the world, but it’s Apple’s responsibility to make all the data it collects understandable and usable — and it can’t hide that behind a monthly fee.
Nice hotel
Forgive me for this tangent, but I swear this is going somewhere: I went on vacation a few weeks ago. We stayed in a nice hotel rather than the less nice but cheaper VRBO condo rental we usually do. Being me, I started thinking about Apple. Like Apple, the brand promise of a nice hotel is that it is a nice hotel. If the hotel didn’t clean the rooms well, provide soap that smelled nice, didn’t keep the refrigerator in the room, didn’t clean the pool, it would probably reduce its costs and increase its profit margin. But it would lose over time decency and become a crappy, overpriced hotel.
It’s a tricky balance of sticking to your brand promise while calibrating how to make a good profit. (Note that the hotel admittedly has a high-margin bar and restaurant and rents out beach supplies at an enormous markup. This is the equivalent of Apple services.)
From the announced decisions of Eddy Cue, I assume that he seems to understand that not everything can be a service. If you remove Apple devices so that they are just empty containers to put services in, you lose the ability to sell iPhones for $1200. Apple must keep its standards high wherever possible, and then offer services that provide value that goes beyond the basics. I don’t expect Apple to give me “Leaving Time” for free, but I don’t expect to pay a fee to use my own Wi-Fi.
An opportunity for change
One final point: Apple is entering a major period of executive transition. A few people, like Williams, have already left. Tim Cook probably won’t be around much longer. A lot of senior executives have been at Apple for decades, made a lot of money, and won’t be around for very long.
It can look like a scary brain drain. And if it wasn’t handled properly, yes, it’s an existential risk for Apple. But it is important to consider that it is also huge opportunitybecause every time someone—even a longtime manager like Eddy Cue! – he will get new powers and new responsibilities, he will get an opportunity to change direction and reconsider old decisions.
Change at Apple doesn’t have to be a scary thing.
Foundry
It’s an opportunity that happens regardless of the status or track record of the people being replaced. When Tim Cook took over as CEO from Steve Jobs, he made a number of immediate changes in corporate policy, including the resumption of charity matches. Being the new boss means setting your own agenda. In fact, one might argue that if you want to establish yourself as the new boss, you have set your own schedule or risk being seen as a caretaker mother.
Every time an executive steps into a new role at Apple, they have the opportunity to rethink decisions and policies, some of which may be years or even decades old. Not that they’ve changed allbut a new set of eyes and responsibilities can often be the perfect tonic for a troubled organization. Sometimes things don’t work right, but no one feels entitled to change them – because that’s how they’ve always been. A new leader can make these changes without feeling any burden of the past.
If Eddy Cue can come in and decide that something Apple has been working on for years doesn’t meet the company’s standards, that even a new service that could potentially generate revenue is a bad idea, imagine what can happen with new managers across the company.
Apple has benefited greatly from an era of management stability over the past decade or two. Now he can potentially benefit from ending that era and embracing change.