When taking a look at nearly every financial metric, it's clear that we are still firmly in the iPhone as Hub era at Apple. There are nearly twice as many iPhones in the wild as every other Apple product combined. Despite slowing iPhone sales, Apple will still sell nearly five times as many iPhones as iPads in 2016. On a revenue basis, the iPhone is responsible for 65% of Apple's annual revenue and 75% of Apple's annual operating income.

WWDC Clues

Given such lopsided financial metrics, it has been very difficult to envision how Apple will eventually move beyond the iPhone. Some think Apple's only choice is to monetize the iPhone business using services. Others don't think Apple will actually be able to successfully come up with a post-iPhone strategy.

Fortunately, Apple's WWDC keynote last week contained clues as to where Apple's product strategy is headed. One theme found throughout management's slides was a focus on the user experience. Whether it was rethinking the iPhone lock screen or opening up additional iOS services to third-party developers, many of Apple's software changes were done with the user experience in mind. (I reviewed additional themes and observations from the keynote here and here). However, much more intriguing were the two fundamental shifts underpinning this focus on the user experience. Each shift portends an era in which the iPhone is no longer at the center of Apple's product strategy.

App Evolution. We are starting to use apps differently. Apple sees an era in which instead of downloading dozens of apps and arranging them in a grid pattern on our iOS devices, we rely on a number of services to handle our daily tasks. Apple's motivation for funneling developers into Siri, Maps, and Messages will end up making it that much easier for users to consume content and data across a number of hardware form factors. As a prime example of how this shift from an app-centric model to a service-centric framework changes Apple's product strategy, consider the Apple Watch. Apple has said that the Apple Watch is positioned within Apple's product line to handle tasks formerly given to the iPhone. In a world where content formerly found on third-party apps is eventually found within Apple services, while it may have made sense to use an app on our iPhone, it will now make just as much sense to use Siri or Messages on our wrist.

Services. Given the movement of third-party app functionality into services, Google is half-right when saying that it is time to move beyond the device. Services are becoming smarter as we give our devices additional tasks and data. This immense level of data ends up placing more value and capabilities with the glue that has traditionally held Apple's collection of gadgets together. However, Google and other services-oriented companies don't have it completely right. When services become more valuable, one consequence is the altering of how we use different form factors. Hardware does not lose relevancy. Rather, a world in which services are much more useful and valuable ends up elevating new hardware form factors that have access to these services. For example, tasks that may have traditionally been given to the Mac, iPad, or iPhone we will eventually be able to do on wearable devices because of more valuable and capable services. It is difficult to think of a form factor that is unable to utilize Siri in one way or another.

The Apple Experience Era

Apple will look to move beyond the iPhone by offering users the ability to create custom Apple experiences. These experiences will involve a range of hardware form factors, the software platforms running on those form factors, and the Apple services connecting each form factor. The following diagram depicts this new Apple Experience era. Depending on the user, each form factor will hold varying levels of importance as depicted by the blue circle's size. The dotted lines represent the Apple services connecting all of the form factors. The solid lines represent situations in which there may be a greater level of dependency between form factors.