Welcome back to The Aleph Report! This week I couldn’t resist writing about Apple’s new smartwatch. One of the things that surprised me while researching it was how shallow the comments around the Apple Watch were. So I decided to expand beyond the obvious on why the Series 4 is a big deal and will eventually change many things in our lives. Enjoy the read!

PS: Since last week we have an open Telegram group for anyone interested in commenting on future stories or angles that you want me to explore. Feel free to join if you want to engage more.

I am not an Apple fanboy, but it’s hard to ignore all the things Apple is doing as of lately. One of the first articles I wrote was about the disruptive potential of the iPhone X. While new apps using the True Depth sensor camera will take time to flower, the Face ID application was an instant hit. 

But there was a big question about Apple’s future then. What happens when the iPhone franchise ends? The future of Apple wasn’t obvious. During the past few years, the company has been increasing their cross-sales capabilities. It’s not about the device itself anymore, but about all other devices, you can connect to the iPhone. The strategy, though, has always revolved around the anchoring device, the smartphone. 

However, the recent announcement of the Apple Watch Series 4 changed all this. Apart from the usual array of iPhone upgrades, the introduction of the new Series 4 Watch stood out as a new strategic direction for Apple.

I’ve been particularly disenchanted with Apple’s efforts around the smartwatch. Their first incarnation, launched in 2015, was despite the record sales, a big disappointment from a product perspective.

The Big Picture: Apple products have always been driven by what they solved. The iPhone addressed a big obsession for Jobs and a natural evolution from the iPod. Nonetheless, the Apple Watch was one of those products that weren’t clear what problem it responded to. In a way, it resembled the Google Glasses fiasco. 

The Apple Watch Series 3 delivered significant improvements over its predecessor. A clear message emerged from Apple: “We’re focusing on fitness and health.” This was the first time they stated a clear goal for the product. It was a big win. 

Why it matters: Fitness and health isn’t just a wearable category, it’s a whole change of behavior. As our society becomes more complex, our mind and body are barely keeping up with the exponential acceleration of technology. The turn towards healthier lives is a growing trend, and it stands to reason that we’ll turn to technology to help us cope with technology. Apple is leveraging this lifestyle change to sell the Apple Watch to this growing audience. 

Still, many other wearable companies have been pushing fitness tracker devices. Apple’s approach wasn’t groundbreaking or especially novel. There wasn’t anything in the Apple Watch Series 3 that made it stand out beyond its slightly better hardware and, of course, the iPhone ecosystem integration.

I don’t want to downplay the fantastic work Apple has done with their smartwatch though. Their iPhone integration is indeed critical. It propelled Apple to the top of the wearables industry, toppling other players that dominated the space until then. This is the power of catering new hardware to the existing iPhone base; it spreads like wildfire. 

Apple’s new smartwatch, though, is a different thing altogether. Two new features are placing the device in a completely different league. Those are the fall detection system and the ECG (EKG) sensor and application. These two features alone moves the smartwatch squarely into the predictive medicine realm. 

Until now, most wearables have been focusing on fitness applications. They record your heartbeat, your blood oxygen, number of steps, etc. It all revolves around tracking and displaying. Such devices have been the foundation of the Quantify Self (QS) movement. Predictive medicine though is a much more complex challenge. While Quantify Self is about tracking, predictive medicine aims to predict when a user is getting sick. For years, being able to predict an illness before it happens has been the Holy Grail of many startups. 

The reason why it’s so challenging is that it requires a confluence of three elements. You need a multi-sensory device, a continuous stream of sensory data and complex predictive algorithms and models. Each one of these is already hard on its own. The need for all three turns it into a significant challenge.

The new Apple Watch is a big step towards that goal. The Series 4 delivers on two of these premises. It creates a real-time, always-on health stream data that informs a complex prediction model on top. 

What’s Next: The device isn’t there yet though. While Apple has achieved a critical milestone, they still need to ramp up the multi-sensory approach. I expect them to cramp other sensors within the smartwatch. Once they’ve saturated the device’s surface, they’ll expand to the periphery with novel add-ons. The new sensory inputs will translate into better predictive capabilities and improved algorithms. 

Several doctors have shared their mixed feelings about the new ECG capabilities. Their primary criticism is around its capacity to correctly diagnose (or misdiagnose) severe health conditions. The arguing is that a one lead ECG will never have the depth of the hospital-grade 12 lead ECGs. What Apple has built within their smartwatch will only detect a minimum subset of heart conditions. 

While I agree, I think that line of thought completely misses the point. Apple didn’t come out with a compact ECG to compete with hospitals. What Apple wants is to skip hospitals altogether through an early detection system. 

One of the dimensions most critics fail to observe is the time variable. While professional ECGs are state of the art, they are only attached to a patient briefly. The Apple Watch will be attached to a user all day long, every week, every year. 

It doesn’t matter if the device can’t detect certain conditions on the short-term. The analysis of thousands of hours of recordings of a single individual can yield other long-term detection methods when compared to that user’s baseline. The combined data of every Apple Watch user far outpaces any sample any hospital or study has ever seen.

What to Watch: It’s important to remember that Apple isn’t a standalone wearable company. They come with millions of iPhone users worldwide which will eventually buy into the Apple Watch narrative. That will allow them to have millions of health data streams to train their algorithms with. Additionally, they’ll be sitting on the most extensive medical sample ever. The current Apple Heart Study done in collaboration with Stanford Medicine is an excellent first example of this. There will be many more in the future. 

The Apple Watch opens a new era for the company. One that will revolve around massive amounts of sensitive information. It begs the question of how will Apple handle such data. The company has taken a robust privacy-first stance, but I wonder how strict will that be when exploiting this side of the business.

While I don’t believe Apple will share any information without consent, it will, most definitely, begin offering integrations with interested third parties. These can range from family members, doctors, autonomous vehicles or insurance companies, to name a few. 

The Bottom Line: The new Apple Watch is not only a communications device. It’s the first step towards a nascent medical prediction platform with global reach. Its potential to change the medical, pharma or insurance industry, to name some, is dramatic. Competitors will eventually catch up with the current hardware, but they will have a much harder time replicating the complex prediction models Apple is building as we speak. Their moat won’t be the hardware, but their algorithms. 

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