In previous blogs, I have argued that Apple was undervalued. No more. My opinion now is that it is fully valued, if not over-valued. But with one crucial caveat that deserves attention.
The caveat is this. Value arises from satisfying human wants. Solving hard technical problems will not produce much value if it does not address human desires. And we human are not getting any smarter nor are our desires changing all that much. As a result, the key to valuation creation in technology is the machine to human interface. That interface, furthermore, is not just the technological aspects, but all aspects including how a device looks, feels, responds, interacts with you and so forth. After all, look how much we humans spend on fashion and appearance.
The caveat is that Apple, in the tradition of Steve Jobs and Jony Ive, is acutely aware of this while competitors have been dropping the ball. If the competitors do not respond quickly, Apple’s valuation could even go higher. Exhibit A of this problem is Samsung’s failure to produce phones that feel good and look good. Exhibit B is Google wasting time on Glass, which is a fashion disaster, rather than rapidly improving and constantly marketing the look and feel of Android. Pick up an Android device and I’ll bet you have no idea what version it is running or how that version relates to the current one. Furthermore, the device is likely to feel uncomfortable in your hand and look ugly. Apple routinely upgrades their operating system in a highly public fashion that produces a consistent experience across users. Jony Ive obsesses over how the devices feel in your hand.
As intelligence moves into all aspects of our lives, the interface will become even more important. I know from my own efforts to build a smart home that the companies are only beginning to address the interface problems in that area. Even GPS devices in cars remain ridiculously complex. The GPS system ought to talk to you like a well-trained assistant. Given that the things you and your GPS will be discussing are limited, this problem could be solved today with proper focus.
To conclude, value creation in the technology space in future years will come down to interface design, including the incorporation of artificial intelligence. Apple is getting that right and as a result is worth more than $710 billion today. If the competitors fail to meet them head on then the value could go even higher.