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Summary:

From a further fragmented iPhone, to smart watches, Jony Ive’s heightened influence and defusing the thermonuclear patent wars, we take a look at the people, themes and products to watch for from Apple in the coming year.

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Even under the steadying influence of Tim Cook, 2012 was a year of big changes and historic challenges for Apple. Reports exposing the labor conditions in Chinese factories demanded Apple take a stand on a human rights issue and the Apple Maps debacle and repeated iCloud outages further highlighted its weakness in online services. It was also a year that saw record-breaking earnings, an all-time stock market high, and the company turbocharge its supply chain.

All of what happened in 2012 sets up next year to be even more important for the company, as Tim Cook and Co. must figure out how to continue dazzling customers with new have-to-have devices and investors with promising returns. Here’s some of what we’ll be watching for from Apple as the calendar flips to 2013.

iPhones for all my carrier friends!

iphone-fragment2013 won’t just be the year we see a T-Mobile iPhone. We’re likely to see a China Mobile iPhone and maybe even an NTT DoCoMo iPhone as well. Fragmentation in global LTE bands has already forced Apple to produce three different versions of the iPhone 5, breaking its long tradition of making a single device that works globally. As more European and Asian operators launch LTE in their own regional configurations and frequencies, Apple will have to start tweaking its devices further if it hopes to reach the same addressable market of its previous iPhone generations. So if Apple is optimizing iPhones specifically for Verizon and AT&Ts' bands, there’s no reason it can’t create a special TD-SCDMA device for the China Mobile, the world’s largest carrier by subscribers. For that matter there would be nothing standing in the way of capturing other global operators that have previously been left out of Apple’s smartphone party.  —  Kevin Fitchard

The patent wars wind down

apple-legalThis should be the year that Apple winds down the distracting legal battles it’s waged since early 2010. To protect the design of its mobile devices, Apple has stationed expensive lawyers in courts all over the world. But it’s not clear these tactics are having any significant effect. Instead, Apple’s been forced to divulge closely held proprietary information about its process and culture. And despite a jury awarding Apple a billion dollars from Samsung after ruling that it deliberately copied the iPhone and iPad, Apple’s biggest and most important hardware competitor continues to churn out popular and well-received devices. And there’s still a chance the award could be reduced. CEO Tim Cook has repeatedly signaled his distaste for these legal entanglements and under his watch Apple has begun to defuse the full-on “thermonuclear war” Steve Jobs began against Android. The company reached an important settlement with HTC this year, and Motorola could be next. 2013 could be the year that Apple and Samsung both decide that, while the stakes are high, this is a battle that should be fought in stores, not in courts. — Erica Ogg

Jony Ive’s new human interface in iOS 7

MountainLion_gamecenterOne of the most significant shifts at Apple in 2012 should result in a bigger one next year: the design of the software that powers your iPhone and iPad. Longtime head of iOS Software Scott Forstall was ousted from Apple, while his duties were distributed among other executives. Jony Ive, Apple’s industrial design guru, was bequeathed responsibility for iOS software design as part of his duties heading up the new Human Interface group. When iOS 7 is released sometime next fall, it’s a good bet we’ll see some changes in the design of the software. Ive has reportedly been lobbying against the gaudy skeuomorphic details that Forstall had championed — the linen textures, green felt, stitched leather trim, wooden bookcases, etc. — and with him in charge, we should start to see a cleaner, more modern look develop. And since the same person is now in charge of the hardware and the software design, iOS should more elegantly reflect the iPhone hardware’s capabilities. –Erica Ogg

A smart watch for the masses

04_Nano_WatchA number of watches that work with or use Apple products have hit the market, but none have actually been delivered by Apple itself. Instead, we’ve seen watch straps for the iPod nano and several third-party smart watches that work with iOS: the Pebble and MetaWatch Strata come to mind. While mainstream consumers aren’t exactly clamoring for such devices, these two generated more than $10.5 million in funding on Kickstarter, the bulk of that total coming from Pebble buyers. That’s no small dollar figure for what’s generally considered a niche device. Right now, Apple finally has everything it needs to create its own smart watch as a complement to its mobile devices and computers. The iOS platform is already more than capable enough for an intelligent Apple-designed wristwatch, and Apple has plenty of experience with touchscreens and communications hardware. A small iOS watch with Bluetooth 4.0, GPS and Wi-Fi could be created with support for companion apps such as exercise or health trackers as well as iTunes support for wireless music listening. I wouldn’t expect touch input to be supplemented with Siri for voice control on a smart watch as the device would need an always-on internet connection, but I’m not counting that possibility out either. In 2013, the time is right for Apple to enter, and possibly own, the smart watch industry. –Kevin Tofel

An evolving iTunes music experience

Globe of planet earth listening to music through headphonesApple has long been investigating alternative iTunes music listening model, and 2013 might be the year it makes a big move. Apple just recently integrated iTunes with iCloud and has been tinkering with the user interface, but the way people are listening to music — and their attitudes toward ownership of content — are changing. It’s been reported that Apple is working to develop a “Spotify-like” streaming web radio service that would be interspersed with its own iAds. While iTunes still sells the vast majority of individual tracks, the experience is lacking when compared to more seamless and popular subscription music services like Pandora and Spotify. Apple’s problem is that iTunes has become clunky software that encompasses so much more than music: there are also videos, apps, podcasts, iTunes U and books. Next year could be when Apple gets back to its digital music roots and appeals to users looking for a simple, streaming, music-focused app customized to their listening preferences. –Erica Ogg (Image courtesy Shutterstock / Elaine Barker)

More experimentation in mobile payments

Square Wallet, StarbucksApple has dipped it its toe into mobile payments and commerce with Passbook, which allows people to hold on to their coupons, tickets and loyalty cards in a single app that presents information on the iPhone’s lock screen. But the potential is there for Apple to go even further: by using its millions of credit cards on file to create a Passbook-enabled payment system that can work at retail locations. Passbook already allows Starbucks Card users to pay with their iPhone when they get to a store. Apple has so far declined to include NFC in the iPhone and it may never integrate the technology. But it doesn’t need to if it relies on geo-fencing, barcodes or other possible mobile payment methods. Apple could also integrate payments with iAds to help deliver local offers or even allow people to pay directly for a product from an iAd, helping make mobile ads more attractive. This would be a big step for Apple and would require a lot of collaboration with merchants online and in stores. Apple might just start with a digital wallet approach, making it easy to pay for online goods first with an iTunes log-in and password. That would compete with PayPal, Google Wallet and offerings from credit cards like V.me from Visa. Eventually, Apple could move in-store using Passbook. — Ryan Kim

  1. Sorry Kevin, there are two basic problems with smart watches: If they’re big enough for the display to be useful, they’re too large and clunky to be something people want on their wrist. If they’re small enough to be something people want on their wrist, they’re too small for the display to be useful. And the other problem is, the battery life is too short to mess around with for very long.

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    1. I’d have to disagree. The Smart-watch is a accessory. It’s a notification accessory. It does not need to act as a stand along device, and if it does, it’s ok to be limited.

      If they built in enough tech, they could easily justify a high price tag. Nice/normal watches cost about $100. The Pebble is going to be $150. $200 would sound about right if apple wanted to compete on that same level…but they could also easily make it a more “elite” product and charge over $300…after all, nice watches can cost far far more than that.

      I just want to be able to read my notifications, view my list’s, or have widgets of information sent over from the iPhone. I want it to be able to vibrate and make basic notification sounds(I don’t care about music ring tones). It does not need anything more than BT4. The battery life needs to last at least 3-5 days.

      Plus, it opens up a entirely new world for app developers to come up with cool ideas and uses that we don’t have the imagination to come up with now!

      I think if Moto had opened up a SDK for the Moto active, they would have seen a higher demand.

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    2. That is exactly what the naysayers felt about the iPad. Too big to carry around, too small to replace the macbook.

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  2. On the subject of “evolving iTunes experience”, I sincerely hope that iTunes continues to offer videos for sale (Movies and TV Shows) and not relegate them solely for rental. Personally, I prefer to own my content and, as a result, have a 3TB external hard drive that houses a 700GB iTunes library.

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  3. Q3 technologies Thursday, December 20, 2012

    Mobile e-commerce is something Apple will really be interested in. An increase in E-commerce apps being developed on the E-commerce platform suggests similar.

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  4. Apple’s biggest strength is identically their biggest weakness : Apple earns a 40% gross margins on most of their products, while the iPhone is somewhere north of 55%. Their (unheard of) huge margins may have worked during the creation of the tablet and the (very smart/high end) smartphone segment. But now that the smartphone and tablet market has become mainstream, the other handset manufacturers that are traditionally strong with supply chain channels are emerging, outselling, and have become very profitable, even with “only” 15-20% margins.

    Samsung releases a very broad lineup of very good smartphones, twice a year. Some models are even arguably considered to be superior to the iPhone, but with 25% lower prices. Apple has just begun to release 2 new models per year but still with the 25% premium. So if you were one of the early buyers of the iPad 3 only to see the better iPad 4 released 6 months later, then expect that to become the norm for Apple, just like Samsung… and that’s really great for consumers.

    While Apple still dominates the profits of the entire mobile market, roughly 60%. Samsung has has more than 45% of the smartphone market share, measured in shipped units. But things may change in 1-2 years. It is very conceivable for Samsung to equal Apple in a short couple of years in the net profit crown, despite having a much smaller gross margin.

    The Apple retail price premium will lead to a lower market share. But their App store ecosystem has proven to be the X-factor of consumer choice. Consumers are willing to pay an extra premium for tech gadgets that just “work well and play well, together.” And that’s Apple’s exclusive domain. Android still doesn’t compete well in that area.

    The 7 inch tablets will cannibalize the larger 10 inch tablets, the smartphones will stop growing at 5 inches, Apple’s iPod Touch will remain competitor free, Android will forever have the uphill climb of an inconsistent look and feel among its hundreds of gadgets, and everyone will wait for the release of the Apple internet TV screen before they try releasing their own internet TV.

    2013 will be a two-way horse race between Apple and Samsung. And it will be the best technology year, ever, for consumers.

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  5. Well its will be a success if Apple make a smart watch!! But with minimum 5 ATM (best 10 ATM) water proof, if not,there is o meaning to make that watch, better to use ipod nan instead in that case.

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  6. This all just feels like a wish list. Whatever happened to laser keyboards and projected holographic screens? ;-)

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