Apple is creating a future without passwords where computers just 'know' who you are — and that might trigger the death of the smartphone (AAPL)

Face ID has the potential to usher in a "Minority Report"-like future where passwords and security logins no longer exist.
If all devices and software automatically know who you are, and your bank account is linked to your ID, then you don't need a device. You just need you.
UBS analysts Steven Milunovich and Benjamin Wilson believe Apple is creating a new "Ambient Paradigm" of computing that will replace the smartphone era.
The iPhone is threatened by Face ID in the same way that your wallet or purse is currently threatened by your iPhone.

Minority report tom cruise gap store The most interesting new technology Apple introduced this week was Face ID, a 3D facial recognition system the iPhone X uses to unlock your phone. It replaces Touch ID, the fingerprint system still in use on most iPhones.

Face ID has the potential to usher in a "Minority Report"-like future where passwords and security logins no longer exist. Nearby computers will just "know" who you are, and let you use them accordingly.

This might hasten the so-called "death of the smartphone." If devices and software all automatically know who you are, and your bank account is linked to your ID, then you don't need a device. You just need you. Any connected interface will be able to serve your needs, and connect you to all your stuff in the cloud, in a completely secure way.

'Apple has a philosophy of self-cannibalization and identifying personal technology trends. It appears to be laying the foundation for the next era.'

UBS analyst Steven Milunovich and his colleague Benjamin Wilson have been developing this theory since last year. They believe Apple is creating a new "Ambient Paradigm" of computing that will replace the smartphone era. In a note from 2016, they said:

"History suggests that few if any hardware vendors stay at the top for long with the 'good enough' attack from below the main reason. However, we think that Apple could become a leader in developing the Ambient Paradigm, essentially raising the bar on user experience and fending off competition."

"Apple has a philosophy of self-cannibalization and identifying personal technology trends. It appears to be laying the foundation for the next era with transition products, such as Apple Watch and AirPods, and services provided by a multi-sided platform. We expect new product categories to be launched."

"... Investors may need to look beyond the first-order purpose of the devices (health/notifications/earphones), just as focusing on iPod as a music player would have indicated little about the future. Apple often introduces important longterm technology in a more modest form that reveals only part of its eventual capability. For instance, Apple appears to have settled on the recent version of the Watch as a fitness play, but we expect health and Internet of Things interactions to become integral over time."

UBS Apple ambient paradigm

Apple has a history of introducing new technology in a trivial way and then building a huge new business on top of it.

On one hand, Face ID is just a clever way to secure your phone. Safer than its predecessor, Touch ID. Fingerprints are a very good method of security. But 3D face recognition requires vastly more data — different angles, moods, beards, glasses, etc. — plus machine learning in order to work. In principle, it's simple: It scans your head in 3D, takes 30,000 or so datapoints, and uses that to look for matches. The more encrypted variables that must be matched, the more secure your device will be. (The matching file is encrypted only on the iPhone itself, so it cannot be stolen via the cloud or used without the physical presence of your face.)

So it is likely that Apple is thinking about Face ID as more than just a cool way to unlock your phone.

Apple has a history of this: Introducing a new technology in a modest, almost trivial way, and then building a huge new business on top of it. When the company launched Touch ID, most people assumed it was simply a fingerprint locking system. We know now (and I'll take some credit for predicting this before it happened, back in February 2014) that Touch ID was really the basis of accelerating Apple's mobile and e-commerce payments system. You no longer need to carry a wallet if your bank account is linked to Apple Pay. Touch ID makes sure your money is only spent when your finger is on the phone.

Similarly, in 2014, Apple began seeding the world with iBeacons that were seen by many as a cheesy marketing gimmick: They might trigger ads on your phone when you walk past a shop. We know now that they are part of the infrastructure behind Apple's vast indoor mapping project on Apple Maps. (Again, Business Insider told you this was happening three years ago.)

You won't need to touch anything. You won't even need a device.

While Touch ID was good, it still had a vestige of the old system: You had to touch a button on your phone to unlock it.

Face ID takes this a step further. As soon as the device sees you, it unlocks it. In the future, any screen or device — or car or shop or bank or airport security kiosk — could work the same way. You won't need to touch anything. You won't even need a device.

This puts Apple customers one step away from a world where, when you enter your HomeKit house, all your devices identify you and unlock without being asked. The system will know where you are, know it's you, and do your bidding. There's a famous scene in the movie "Minority Report" where exactly this happens to Tom Cruise's character:

You might not need a phone or a wallet or a purse to navigate this world, if every object in it is smart enough to recognise you and secure enough to let you do what you want with it until your face disappears from view.

Apple can't own this type of identification forever. Google and Facebook both have equally gargantuan databases of information about you that could be linked easily to your physical biometric identity. The race is on.

Crucially, nothing in the Ambient Paradigm world requires that you carry an actual device. This is why the iPhone, in the long run, is threatened by Face ID in the same way that your wallet or purse is currently threatened by your iPhone.

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