Apple's WWDC - Four Features That Will Disrupt Google, Facebook and Mobile Commerce
Apple's (NASDAQ: AAPL) is expected to unveil its latest update of iOS today at its Worldwide Developers Conference, which kicks off today in San Francisco. One upgrade within iOS 6 may reverberate well beyond the company's universe of product users and shareholders.
That upgrade would be the all-but-confirmed move to Apple's own mobile maps (possibly to be called iMaps). Until now, Apple has relied on Google (NASDAQ: GOOG) Maps.
Why is this move important?
The quick answer is mobile advertising. This space is seen as the next frontier to conquer for consumer internet companies, as mobile devices are expected to outnumber PCs as internet access points in the very near future. The next generation of mobile maps is expected to incorporate location-enabled advertising through search-on-the-go.
Apple has understood the immense power its devices represent, and it believes Google has benefited just about long enough, thus it's moving to cut it off just as the gettin's better. A recent Nielsen study notes that half of newly activated smartphones are iPhones, and the company's iPad still captures two thirds of the tablet market currently (although that is expected to come down to 50 percent by 2017, according to ABI Research). That will be a lot of mobile traffic that Google will no longer have by default. What is the associated cost to Google? As much as 40% of mobile revenue, at least on current terms, according to Piper Jaffray's Gene Munster.
There is another anticipated iOS 6 update that may represent enhanced headaches for Google: deep system-wide Facebook integration. Facebook (NASDAQ: FB) will arguably contribute to a synergy towards the monetization of the brand-new iOS Maps, picking up a much-needed vote of confidence in the process. As Facebook is expected to reside deep within iOS 6, it will be able to deploy relevant and highly actionable ads to mobile users on the go. Both companies will then be able to produce high quality metrics to marketers on the relationship between an ad deployment and subsequent customer action. Think heatmaps and time-series traffic flows between map search and advertised points of sale.
After Maps and Facebook integration, what are some potential updates from today that should worry Google?
The updated Siri. It may become Apple's next search engine in lieu of Google. Apple's fabled digital assistant may still well short of expectations and its potential, but look for today's update to reveal a better-functioning iteration. Given that the search engine of the future is hands-free, Siri is at the top of Google's threats.
NFC, or near-field communication is a feature that has been heavily rumored for years. Already available on select Android devices, the technology is still in its nascent stages. However, given that Apple gets into an “innovation” only after its implementation has become more practical, the NFC's announcement is a catalyst of a whole new pivot in the mobile-powered commerce. Think of mobile map searches that serve an advertisement for a product that you can pay for before you get to the point of sale, with a locked-in discount, and perhaps with a Facebook credit account. Some of this scenario is still some way from reality, but its fast-approaching.
As far as market action today, keep a close look on AAPL and FB. AAPL shares may gyrate modestly given the extent announcements measure to expectations. FB shares may see a more significant bounce depending on how the Facebook integration is presented. For that matter, keep an eye on GOOG, whose share move may be a mirror-opposite of AAPL on the downside.
Let the “games” begin.
I hold no AAPL, FB or GOOG positions now or in the days following this note.
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