Apple’s Turnaround on Smart Glasses

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Remember back in 2015, when Apple Chief Executive Officer Tim Cook liked to dump on smart glasses? As he told the New Yorker, in a profile of then-head designer Jony Ive: 

“We always thought that glasses were not a smart move, from a point of view that people would not really want to wear them. They were intrusive, instead of pushing technology to the background, as we’ve always believed. … We always thought it would flop, and, you know, so far it has.”

It was really a dig at Google Glass, the nerdy-looking product launched in 2013 and finally killed for good this year. When Cook called Glass a flop, Apple was on the cusp of releasing another piece of hardware: its smartwatch.

You may have noticed, though, that Apple unveiled its own smart glasses–well, goggles–this week. The Vision Pro will be released next year at an eye-popping (pun intended) $3,499.

So what changed?

On the one hand, not much. There are still plenty of people out there who would agree with Cook’s 2015 assessment. Apple’s headset is an impressive piece of kit (if it works as advertised in Monday’s demo), but it’s still kind of intrusive. A TV and sofa is still a better environment for communal Sunday evening viewing.

But a bunch of other external factors have changed—two in particular. 

The first was that up the road in Silicon Valley, Mark Zuckerberg went all-in on augmented and virtual reality, rebranding Facebook to Meta in 2021. To be clear, Apple had already been working on augmented reality technology for about five years by then, according to Bloomberg News’s Mark Gurman. But Apple started working on the tech a few years after Facebook acquired VR firm Oculus in 2014, and of course after Google had released Glass.

The second is that Apple has more money than it can easily spend. The company throws off $100 billion in free cash flow each year, double what it did in 2014, the year before Cook made those comments to the New Yorker. It returns a big chunk of that cash to shareholders in the form of buybacks and dividends. But Cook can’t really spend big on dealmaking: Even if he wanted to (and he doesn’t), he’d struggle to get most big acquisitions through regulators–as Microsoft Corp. has found with its planned $69 billion takeover of gaming giant Activision Blizzard Inc., which British antitrust authorities are trying to block.

So he has to find other ways to release the cash. New products are an obvious place to start: Spending on research and development jumped from $8 billion in 2015 to $28 billion in the 12 months through March. The entire UK business sector spent just $26 billion on R&D in 2019, the most recent data available. Yes, every company in the UK combined spent less than Apple alone does right now.

You bring those two factors together–the big bets from Meta and others on AR/VR, and Apple’s massive pile of cash–and it can help explain why Cook might think this move is necessary. If, despite all the justifiable misgivings, smart glasses do manage to become the next frontier for computing, and Apple doesn’t have a product offering there, it would be deemed a tremendous strategic blunder. Zuckerberg will have achieved his goal of circumventing Apple and Google (as the dominant makers of mobile operating systems they’ve been able to throttle the data available to Meta’s advertising business). Apple would be on a fast track to becoming its old rival, IBM: the main player in the previous generation of computers.

But if smart glasses fail to take off, then Apple hasn’t really lost all that much. Sure, maybe a certain amount of face, and a few billion in development costs. But nothing it can’t shrug off as long as the iPhone continues to generate north of $200 billion in annual revenue. —Alex Webb, correspondent for Bloomberg Quicktake

White-Collar Crime Wins

If it’s getting hard to prosecute white-collar crimes, there’s a strange entity to thank: the US Supreme Court.

Sabrina WillmerPatricia Hurtado write in this week’s magazine, two recent decisions have indicated that the judges think federal prosecutors have been overreaching on certain kinds of cases. They write:

The decisions brushed back attempts to use federal wire fraud charges to criminalize conduct that didn’t involve stealing money or tangible property. “You are beginning to see a string of cases—that are somewhat related—that are pushing back on these very aggressive theories used by prosecutors,” says Andrew Boutros, a white-collar defense attorney at Dechert. “Rather than going after cases that are straightforward layups, you have a scenario where the government is taking shots from the half-court line and missing.”

In one of the key cases, the court overturned the wire fraud conviction of New York real estate developer Louis Ciminelli. Prosecutors said he was part of a bid-rigging scheme in which the requests for bids on a $750 million public development contract were narrowly tailored so that his company would be the likely winner. Based on a theory called “right to control”—the idea that information needed to make economic decisions can be a kind of property—prosecutors argued that Ciminelli defrauded the nonprofit agency in charge of the project of its ability to make a sound decision about which developers to hire.

This “right to control” theory tests the line between criminal and merely unethical conduct. It could have significant knock-on effects in how, and who, gets prosecuted even if the theory itself isn’t employed in every white-collar fraud case. And it’s not the only thing that courts are quibbling with in this spate of decisions, which may even have implications in Sam Bankman-Fried’s upcoming trial. Read the whole story

Scent memories

Sometimes, a headline says it all: “Bath & Body Works Wants Men to Smell Good, Too

And they do! As Bloomberg’s Leslie Patton , the company is building on the success of its mens’ products to expand the offerings, selling things like $14 beard oil and $15 face cream infused with hyaluronic acid—for men. The numbers are growing:

Bath & Body Works President Julie Rosen says the mall stalwart can easily double its annual men’s sales from 2022’s $400 million, which was 5% of total revenue. That figure can reach $800 million in men’s products “in the next few years,” she says. “It can be a much bigger part of the business.”

But how do you communicate that, say, body wash is for the guys? Enter influencers and some new colorways:

The company’s plan includes marketing via Instagram and TikTok with influencers such as 29-year-old model and marketer Marquis NealAdam Wachowiak, a 31-year-old dad who sings about the mahogany teakwood scent to his 97,000-plus followers. The chain is also adding store-in-store men’s-focused displays, splashed with darker hues of navy blue and gray rather than Bath & Body Works’ traditional bright colors.

Will this entice men to enter this mall favorite for girls? It remains to be seen. But the sector itself is booming.

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