Chapter 1: A Shift in Apple's Innovation Strategy

It's been quite some time since Apple was viewed as a pioneer in innovation. Today, the company often seems to trail behind in terms of new technologies, opting for a safer approach by enhancing existing products rather than introducing groundbreaking ones.

Consider the Samsung Galaxy Fold series, which has successfully progressed to its fifth generation while Apple has yet to unveil a foldable device. While this cautious approach isn't necessarily negative—many cutting-edge technologies aren't ready for mass adoption—I predict that when the demand arises, Apple will inevitably rise to the occasion.

Currently, Apple has established its reputation for creating products that simply "work." Reflecting on the iconic Nokia phones from the early 2000s, which were humorously touted as tough enough to crack a walnut, one might draw parallels to Apple's modern image. While I wouldn't attempt to crack a walnut with an iPhone, it’s frequently regarded as the epitome of reliability—whether or not this reputation is warranted is beside the point.

Terms like "dependable," "virus-free," and "user-friendly" are commonly associated with Apple, showcasing its significant strength in the market. It has cultivated a loyal fanbase that enthusiastically embraces everything from laptops to tablets, even though the Apple TV is often seen as the weakest link among streaming services.

Today, while AI emerges as the next frontier, the real treasure for Apple lies within the realm of wearables.

The advent of ChatGPT represents one of the most significant advancements of the past two decades, unlocking numerous productivity opportunities. Yet, I doubt that Apple will be able to outpace Microsoft in this arena. Their previous attempt to rival Google Maps was far from successful.

Instead, Apple's future success may be more tied to wearables—specifically, the coveted non-invasive continuous blood glucose monitoring technology.

Chapter 2: The Promise of Non-Invasive Glucose Monitoring

Understanding the term "non-invasive" is crucial; it refers to the ability to monitor blood sugar levels without the need for finger pricks. "Continuous monitoring" indicates frequent readings throughout the day, typically every 15 minutes or less.

Currently, technology does not allow for non-invasive blood sugar readings without some form of skin penetration. Advanced devices that utilize infrared light are available, but they tend to be bulky and costly.

Continuous glucose monitoring (CGM) is not a novel concept; devices like the Freestyle Libre already exist in the market. However, these devices still require the user to wear a patch embedded with a needle, which can be both expensive and inconvenient due to the need for periodic replacement.

Apple isn't alone in pursuing non-invasive CGMs; Samsung and several lesser-known companies, such as PK Vitality and Quantum Operation, are also in the race. The potential market for non-invasive wearables is as vast as that of mobile phones.

Estimates suggest that nearly 40% of American adults are prediabetic, according to the CDC. The American Diabetes Association provides further insights:

• Prevalence: In 2021, about 38.4 million Americans, or 11.6% of the population, had diabetes.
• New Cases: Annually, approximately 1.2 million Americans receive a diabetes diagnosis.
• Prediabetes: In 2021, 97.6 million American adults were classified as prediabetic.

The key to combating diabetes lies in prevention, as there is currently no cure. Elevated blood sugar levels can inflict damage on blood vessels, leading to severe complications such as heart disease, cancer, kidney failure, nerve damage, and even blindness.

Unfortunately, diabetes management is often hindered by misinformation and outdated guidelines that prioritize complication prevention over effective treatment. Many consumers don't perceive diabetes as life-threatening, leading to minimal emphasis on regular screening and dietary measures.

Despite its deadliness, diabetes is among the easiest conditions to prevent, monitor, and manage. A simple finger prick can suffice for diagnosis. So, why aren't more people taking action? The answer is primarily a lack of awareness.

Many individuals are deterred by the idea of finger pricks. However, imagine if screening technology were integrated into a wearable device, eliminating the need for finger pricks and providing 24/7 glucose monitoring to illustrate how various foods affect blood sugar levels.

This innovation could potentially save billions of lives and significantly reduce global healthcare expenses.

The American Diabetes Association reports:

• Cost of Diabetes: The total cost of diagnosed diabetes in the U.S. reached $412.9 billion in 2022, with $306.6 billion attributed to direct medical expenses and $106.3 billion in indirect costs.
• Average Costs: Adjusted for population variables, average medical costs for individuals with diabetes are 2.6 times higher than those without the condition.

Given the staggering medical costs, the potential for widespread CGM adoption is enormous. If we can provide mobile phones to nearly everyone in developed nations, offering CGMs on a wrist could be next.

The visual feedback from real-time CGM could profoundly influence dietary choices. For instance, witnessing a blood sugar spike after indulging in sugary treats might encourage healthier eating habits.

While several low-cost devices claim non-invasive glucose monitoring, many have been debunked by health experts. Nevertheless, the market potential for a reliable non-invasive CGM watch is immense.

Countries with universal healthcare often subsidize CGM costs for Type 1 diabetics, with main devices costing upwards of $8,000. Traditional blood glucose monitors, while cost-effective, require painful finger pricks and expensive test strips.

Imagine replacing these methods with a smartwatch capable of providing blood glucose readings within 20% of lab accuracy. Such a device would likely receive FDA approval, encouraging state governments to subsidize its purchase.

Even without subsidies, many diabetics would willingly transition to non-invasive technology if the pricing is reasonable.

Chapter 3: Apple's Strategic Position in the Wearables Market

Reliability is the most critical attribute for any medical device. Accurate readings are essential for FDA approval, and while it's unlikely that a consumer-grade smartwatch will fully replace invasive monitors for insulin-dependent diabetics, many non-insulin-dependent diabetics and even healthy individuals could greatly benefit from a device that tracks blood sugar fluctuations.

The demand is evident: countless diabetics have expressed their willingness to purchase an Apple Watch if it included glucose monitoring capabilities. Given Apple's reputation for reliability, it stands well-positioned to dominate this wearables market.

Even if competition arises, the market's size could support multiple successful players. The diabetes crisis extends beyond the U.S.—countries like China face severe challenges due to a growing population and rising obesity rates, while India grapples with a carbohydrate-heavy diet.

As diabetes rates climb due to processed foods and obesity, the market for health-related wearables has a long growth trajectory ahead. We may still be at the beginning of this evolution.

Apple is truly sitting on a gold mine.

Regards,

Mr. Ox.

(Author Disclaimer: I own ETFs that hold Apple stock.)

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Chapter 4: Insights from the Music and Business Worlds

MaryLiz's "Sitting on a Goldmine" from the NPR Tiny Desk Contest 2021 showcases the intersection of creativity and opportunity in today's economy.

Chapter 5: The Value of Social Media Insights

In "Are You Sitting on a Social Media Gold Mine?" Amanda Bucci discusses leveraging social media for business success, mirroring the potential Apple has in wearables.