Apple Can’t Innovate Anymore, My A$$

by John Kirk   |   July 5th, 2013

I am sick to death of pundits proclaiming that Apple can no longer innovate. Apparently, the less one knows about a subject, the more strident one’s opinion on that subject becomes. Nevertheless, this nonsensical posturing has simply got to stop, for it is easier to believe a lie that you have heard a thousand times, than the truth that you have heard only once.

Can’t innovate anymore, my ass. ~ Phil Schiller

The critic’s arguments seem to break into two categories, which are really two sides of the same coin:
– Apple desperately needs to enter a new product category;
– (But it’s already too late because) Apple can’t innovate anymore.

Apple Desperately Needs To Enter A New Product Category

Apple again seen losing steam, new products needed desperately
Apple managed to earn $9.5 billion in profit on $43.6 billion in sales last quarter without launching any exciting new devices, but the long wait for new launches is expected to begin taking its toll this quarter.

Apple’s business model forces it to constantly come up with groundbreaking new products
“At most companies, a year without a major new product release isn’t cause for panic. But Apple isn’t most companies. The problem with that business model is that it forces Apple to constantly come up with a groundbreaking new product.”

Apple needs new hardware
“There’s two reasons Apple needs new hardware: To prove it can still create killer new product categories post-Steve Jobs and because that’s how it makes its money.”

Find a new category to go innovate
“I keep trying to tell Apple…” Misek says, “Find a new category to go innovate.”

Any man who thinks he knows all the answers most likely misunderstood the questions.

Apple, a once-great innovator
“With Apple wrapping up its developer conference this week, the contrast between the once-great innovator that brought the world into the smartphone and tablet era and current Silicon Valley revolutionary Google couldn’t have been more stark … innovation is ideas like Google Glass, which represent new paradigms of human interaction with technology.”

Apple’s trailblazing days are over
“Google’s gaming console: The latest sign that Apple’s trailblazing days are over?”

Apple hasn’t been able to enter any major new product categories in years
“Apple’s stock hasn’t slid because it’s been putting out uninspired hardware — it’s slid because the company hasn’t been able to enter any major new product categories in years….”

If it can’t reinvent a category again soon, Apple could be in big trouble “(Apple) transformed itself from a niche company in the computer world to one that created entirely new categories of gadgets. If it can’t do that again soon, Apple could be in big trouble.”

The list of areas where Apple can repeat its act is dwindling
“In the past, Apple snuck up on people. It entered markets filled with clunky, overly-geeky products, released groundbreaking consumer-friendly versions, and established its dominance before rivals had the chance to respond … But today, we have huge companies investing millions of dollars in products that Apple “may release in the future.” … If there’s any area in which Apple can innovate, chances are, someone has already imagined it, written a blog post about it, Photoshopped it, and created a ready-made blueprint for any company that wants to gamble on it. … The list of areas where Apple can repeat its swoop-in-and-turn-the-industry-upside-down act is dwindling.1

By the time Apple does it, it will have already been done
“(L)ike just about every other possible area of innovation, it’s becoming less and less likely that we’ll see more Apple “trailblazing.” … By the time Apple does it (no matter what it is), it will have already been done … and probably much more elegantly than the pre-iPod MP3 players, pre-iPhone smartphones, or pre-iPad tablet PCs.”

iWatch will be another hobby
“Just Like Apple TV, The Apple iWatch Will Be Another Hobby For Tim Cook”

Apple outfoxed: Foxconn first
“Apple outfoxed: Foxconn first to debut iPhone-compatible smartwatch”

Samsung is already working on a watch
“…Samsung …is already working on a watch of its own.”
Samsung unveiled games console first
“Sorry Google And Apple: Samsung Unveiled Games Console First”

Google to beat Apple to products Apple is reportedly developing
“WSJ: Google working on an Android-powered game system, smart watch and new Nexus Q … its reason for jumping into all these categories is to beat products Apple is reportedly developing in the same categories….”

(But It’s Already Too Late Because) Apple Can’t Innovate Anymore

It’s harder to innovate once you’re the incumbent
“Apple’s problem is that it becomes harder to innovate once you’re the incumbent rather than the challenger”.

Apple is not innovative
“Quite frankly, Apple is not innovative…”

Apple aren’t innovating any more
“(Apple) have a right to be proud of their accomplishments, but it’s not surprising that pundits claim they aren’t innovating any more.”

Apple is no longer a leader
“Apple is no longer a leader. Apple has become a challenger that now needs to look up to other leaders across the multiple categories it competes in and figure out what to do next.”

Apple is just another product company
“(T)herein lies the rub and the real tragedy: Apple is quickly becoming just another product company….”

Another company out-innovating Apple
“Cramer: Another Company Out-Innovating Apple?”

Apple has become a design follower
“Apple has become a design follower instead of a leader — and it may be just fine with that”

Apple is a lagging brand
“Apple’s Fall From Leading To Lagging Brand”

Stunning nine month gap between product events
“Apple will hold its first major product event in nine months on Monday, a stunning gap for a company that relies on regularly impressing customers with new innovations.”

A bear walks into a bar and says, “Bartender, I’d like a gin . . . . . . . . . . . . . . . . and tonic.” And the bartender says, “Sure, but what’s with the big pause?”

Jony Ive is meddling in software
“Sir Jony has been trapped in a monochromatic hardware world of his own making for so long that now that he’s allowed to meddle in software, he’s pulled out that box of Crayolas he’s kept locked in the bottom drawer and let loose his inner Wonderland.”

The end for Apple exceptionalism
“iOS 7 redesign: the beginning of the end for Apple”

Apple plays catch up
“Apple’s primary motivation (with iOS 7) was to play catch up with… no, not Android but with Microsoft.”

All been done before “…Apple has not only failed to truly innovate in its own right, the changes and additions it has introduced (in iOS 7) have all been done before.”

Nothing new
“Is iOS 7 Apple’s admission that it has nothing new to bring to the table?”

I miss John Dvorak and Rob Enderle…but my aim is improving. ~ John Kirk

The Wide Lens

“The farther back you can look, the farther forward you are likely to see.” ~ Winston Churchill

I mean, honestly, could Apple’s critics be any more wrong? Could they have it any more backwards? Do they know nothing at all about Apple or the Tech industry? The very people who seem most certain of Apple’s future (or lack thereof) are also the very people who seem most ignorant of Apple’s past. The following lengthy excerpts are quoted from Ron Adner’s: “The Wide Lens: What Successful Innovators See That Others Miss.”

Jobs tended to be late for everything because he wanted everything to be ready for him

“(Steve) Jobs tended to be late for everything because he wanted everything to be ready for him. Jobs understood that the natural trajectory of challenges is toward the (smart mover, not the) first mover. (When the co-innovation of an ecosystem is required), the pioneer has no advantage. In fact, the pioneer is at a slight market share disadvantage relative to laggards. The “system” works to resolve co-innovation challenges, while industry rivals figure out execution.” “Reflecting on catching technology waves in 2008, (Steve Jobs) said:

“Things happen fairly slowly, you know. They do. Those waves of technology, you can see them way before they happen, and you just have to choose wisely which ones you’re going to surf. If you choose unwisely, then you can waste a lot of energy, but if you choose wisely, it actually unfolds fairly slowly. It takes years.”

“His insight was to ‘surf’ the co-innovation wave, knowing that its challenges would be resolved over time. His brilliance was to wait to expend his energy on the execution challenge.”

Waiting To Catch The MP3 Wave “Steve Job’s iPod journey is an exemplary illustration. Jobs knew that, on its own, an MP3 player was useless. He understood that, in order for the device to have value, other co-innovators in the MP3 player ecosystem first needed to be aligned.” “Jobs constructed the iPod ecosystem. (Then) Apple waited, and then waited some more…. As the iPod’s co-innovation risks faded away — when (the) pieces were solidly in place — both MP3s and broadband were finally widely available — (Apple) finally made its move, putting the last two pieces in place to create a winning innovation: an attractive, simple device supported by smart software.” “With its proprietary hardware-software combination, (Jobs) didn’t just put down the last piece, he put down the last two pieces. And he made sure they interlocked. Apple didn’t launch the iPod as a product. In combination with its iTunes music management software, the iPod was a solution.” “By shifting to offering solutions, Apple increased the execution challenge for itself as well as for everyone else, effectively lowering the value of competitor’s previous efforts and increasing the barrier for rivals to achieve future success.”

Waiting To Catch The Smart Phone Wave

Once again, Jobs was late – five years late

“Once again (with the iPhone), Jobs was late – five years late.” “And rivals didn’t seem to care.” “Reacting to Apple’s January 2007 announcement of the iPhone (six months before its launch), Jim Balsillie, co-CEO of BlackBerry shrugged, “It’s kind of one more entrant into an already very busy space with lots of choice for consumers.” “Asked to react to the announcement of the iPhone, Microsoft CEO Steve Ballmer literally laughed out loud.” “Steve Jobs could smile because he knew what (his) ecosystem carryover meant. Of the 22 million iPods sold during the 2007 holiday season, 60 percent went to buyers who already owned at least one iPod. The iPhone was not going to be a new entrant fighting to capture attention in a crowded mobile phone market. It was the next generation iPod. By carrying over the key elements of the iPod ecosystem, he would carry over his buyers too.”

The Critics Have Gotten It All Wrong

Apple’s critics seem to be diagonally parked in a parallel universe

After reading the excerpts from Ron Adner’s book, you can see just how wrong the critics have been.

A bartender walks into a church, a temple and a mosque. He has no idea how jokes work.

Some technology pundits appear to have no idea how tech works, either.

“Some people get lost in thought because it’s such unfamiliar territory.” ~ G. Behn

Not only have the critics gotten it wrong, but they have gotten it exactly backwards. Their advice constitutes the worst possible course of action for Apple, not the best.

Listening to free advice of a certain kind costs you nothing…unless you act upon it.

The critics don’t remember Apple’s history or tech history or the history of innovation.

Why don’t Apple’s innovation critics make ice-cubes? They can’t remember the recipe.

Stop telling us that you can predict the future when you can’t even recall the past

Apple’s critics need to stop telling us that they can predict Apple’s future when they’ve already proven that they are not even capable of accomplishing the far simpler task of recalling Apple’s past.

The past, the present and the future walked into a bar. Then things got tense.

The facts can always be ignored, but one does so at one’s peril.

A drunk walks into a bar. “Ouch!” he says.

Nor does ignoring the facts change the facts or make them go away.

“Facts do not cease to exist because they are ignored.” ~ Aldous Huxley

When you’ve got your facts wrong, the second thing you need to do is more research.

I went to a bookstore and asked the saleswomen, “Where’s the self-help section?” she said if she told me, it would defeat the purpose.

When you’ve got your facts wrong, the first thing you need to do is just shut up.

First law on holes – when you’re in one, stop digging. ~ Denis Healey

Categories

What is this nonsense about there not being any more tech categories to conquer? The best way to evaluate whether Apple could enter a market is to ask whether people are satisfied with their current user experience. Where there is dissatisfaction, there is opportunity.

First

What is this obsession with being first to market?

It is better to be a smart mover than a first mover

– Did being first help MP3 Man in MP3 Players, Palm, Nokia or Rim in smart phones, Microsoft in tablets, Microsoft or Google in TVs?
– Did not being first hurt Apple in iPods, iPhones or iPads?

No, in an ecosystem that demands co-innovation, it is better to be a smart mover than a first mover. Arguing that Apple has missed the streaming music or the console or the TV or the wearables market is like arguing that Apple has missed the train when the tracks have yet to be laid.

Apple Is Surfing The Innovation Wave (Like Mavericks)

Apple is doing what it has always done – and what it has always done successfully. They are surfing the innovation wave, just waiting for the complementary ecosystem parts to catch up. Apple isn’t late, the co-innovation wave is late. And when that co-innovation wave finally arrives, history tells us that Apple will be ready.

Rainbows & Innovations

images-70Rainbow

Rainbows don’t appear when it isn’t raining or in the darkness of the night or after every rain shower, but that doesn’t mean that there will never be a rainbow ever again. Rainbows only occur when all the conditions are right.

Significant tech innovation doesn’t appear every day, or every month, or every year, and new tech categories are rarer than hen’s teeth, but that doesn’t mean that there will never be innovation ever again.

Innovations only occur when the conditions are right.

Study the industry. Wait for the conditions to be right. And while you’re waiting for the next tech innovation, the next tech category, or even the next rainbow…

…don’t be an a$$.

  1. The list of areas where Apple’s opportunities are supposedly dwindling: “TV? Microsoft beat Apple to the punch with futuristic voice and gesture control, and Hollywood doesn’t appear willing to let anyone innovate on the content distribution front. Wearables? Everyone and their mother is making a smartwatch, and Google has Glass locked, loaded, and almost ready to fire. Mobile/desktop PC convergence? Microsoft has already put its chips in that basket. … and then there’s gaming. The established players Sony and Microsoft are continuing to innovate, and now that Google is reportedly making this Android-based gaming console, that’s one less way that Apple can sneak in the backdoor and set the house on fire”. []

John Kirk

John R. Kirk is a recovering attorney. He has also worked as a financial advisor and a business coach. His love affair with computing started with his purchase of the original Mac in 1985. His primary interest is the field of personal computing (which includes phones, tablets, notebooks and desktops) and his primary focus is on long-term business strategies: What makes a company unique; How do those unique qualities aid or inhibit the success of the company; and why don’t (or can’t) other companies adopt the successful attributes of their competitors?
  • Carlos Ⓥ

    Well put. Most tech bloggers and so-called-analysts nowadays seem to bet on Apple’s failure. It’s almost comical how mainstream media play the “Apple-is-doomed” game while Apple customers are more than happy with their devices, with several years worth of customer satisfaction ranking in the first places.
    You’ve nailed it: Apple is not a first mover, but a smart player.

  • Kenny

    Hmm you have a lot of faith in apple, which is remarkable. But as long as you’re not willing to put your saving money where your mouth is, (on Apple Stock) it will always be easy for me to consider pundit like you as apple fan.

    Beside all of this great historic achievement you pointed out was before Google, (one of the best tech company) and when Jobs was alive. Two very important factors to consider.

    • benbajarin

      Myself, like John, have a great deal of faith in Apple the company. The stock not so much due to Wall St. total ignorance into the vertical nature of Apple and how strategic that is for market success. The key to wisdom in this conversation is to separate Apple the company from Apple the stock. Their future is not interlinked with the two.

      • Kenny

        The past is never a Guarantee of your future success
        Unfortunately for Apple, People like you make no big difference to the company anymore, you are loyal to them and are likely to remain until death.

        Those who count are the next millions upon millions of future buyer that Apple will have to convince to become as loyal as you, and go to the store to continue to buy their product without asking any questions about alternative, and it the big challenge ahead

        • Brian_M_CDN

          I dispute that existing users don’t matter to some extent. Apple has been using the “Halo effect” for quite a while now. Each new device has helped the growth of others. And happy users are more likely to attract other users.

          I may typically buy Apple products (and have since the mid 90′s), but it isn’t out of blind loyalty. I use other products on a daily basis and am glad that people at Apple decided to make devices they would like to use themselves instead of a product based on a checklist of features. Some others have been improving lately (both Windows & Android) but I still find that less of my time is wasted when I just want to do things by using Apple products.

          Out of my friends & family, most are now “Apple users” it may have started with one device, but most now own multiple Apple products (computers, iPhones, iPads, iPods) – with no effort to very little on my part.

        • Nangka

          “Those who count are the next millions upon millions of future buyer that Apple will have to convince to become as loyal as you, and go to the store to continue to buy their product without asking any questions about alternative, and it the big challenge ahead”

          And how is this any different from the other companies like Google, Samsung, or Microsoft? They too have millions upon millions of future buyers who are not their current customers, while their current ones are arguably not as loyal as Apple’s. Yet the amount of (bad) press, if any, about them not innovative or doomed is not even close to those about Apple’s.

        • http://www.noisetech-software.com/Home.html Steven Noyes

          ” and go to the store to continue to buy their product without asking any questions about alternative”

          What makes you think for a small second those who purchase Apple products never examined any alternatives? For example, I have a Nexus 4 (about 95% idle) but choose to use iOS because I greatly prefer its UI and eco-system (not to mention programming iOS is many times easier than programming Android).

    • Nangka

      If you don’t understand Apple, it’s understandable to not have too much faith in it. John is telling these people it’s ok to not have faith in Apple, but just don’t be an “a$$”. –/Nangka/

    • FalKirk

      “… all of this great historic achievement you pointed out…” – Kenny

      I wasn’t pointing to the historic achievement, I was pointing to Apple’s historic method of implementing innovation. Pundits are criticizing Apple today for doing exactly what they did yesterday to become the success that they are today.

      • Kenny

        as someone who knows business as you, and after picking on Google for not making enough profit on Android, which ‘was a good counter argument against those who preach market share as a success story, you seem to forget something about to Apple itself.

        Apple is primarily an Hardware company.
        65-70% of their money comes from selling the Iphone, add to that the success of company like Samsung with their Galaxy S4 and Google is also known to be as innovative if not more than them, they will needs to convince people to buy more of it more often. That has to come from defining new categories of product as profitable as the Iphone or sufficiently altering existing ones that people return to the store to make a purchase which will not be easy giving the current trend, absent of that, it is clear to me it won’t be long before they become just another great hardware company. but i wont bet my money on their Future.

        • FalKirk

          I’m not sure that I quite know what you’re arguing here.

          – Apple IS and continues to be tremendously profitable.

          – Apple has a rapidly growing product in it’s pipeline. It’s called the iPad. Maybe you’ve heard of it.

          – Google IS tremendously innovative, but Apple makes more profit in a quarter than Google does in a year.

          –Samsung’s mobile phones accounted for 74% of Samsung’s operating profit last quarter. This is incredibly shocking for a company as diversified as Samsung.

          http://tech.fortune.cnn.com/2013/07/05/apple-samsung-stock-price/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+fortuneapple20+%28FORTUNE%3A+Apple+2.0%29

          What I’m arguing is that you can’t count Apple out just because they haven’t re-created a market in over three years. That’s like counting out the Superbowl Champions during the preseason.

          Help me out. What exactly are you arguing?

          • Kenny

            @ John I’m not sure that I quite know what you’re arguing here.

            - i agreed but that is no guarantee thing will still be the same 5 – 10 years from now giving their Business model, and the competition.

            - i would not bet on the iPad as their Future.

            - So do Microsoft, but when it come to Google vs. Apple, is all about future potential, not their Current profits.

            - i do not care about Samsung, i only care about the impact they can have on apple future profit and competitiveness.

            - i am not counting apple out, i just don’t see where their next magic will come from, and live up to the standard that they have set for themselves.

          • FalKirk

            “… i just don’t see where their next magic will come from…” – Kenny

            Did you, or any of us, foresee the incredible success of the iPod, iPhone or iPad? Arguing that Apple is in trouble because the market cannot “foresee” Apple creating magic product is like arguing that we shouldn’t go with the guy (Apple) who just hit three straight grand slams but should, instead, go with the guy (the market and the analysts) that just struck out three straight times.

          • cl

            its really the ipod and the touch interface of iphone/ipad. the touch interface was nothing new; it had been out for many years. as jobs said, you can see waves coming in tech far in advance. that wave played right into apple’s hands because of their expertise in design/hardware/software. what is the next wave apple can ride that plays to these strengths? one is the TV, but that wont be nearly as lucrative a business as smartphones. another is wearable devices (really just the watch). i think that has a lot of potential, but im not sure battery tech is up to par for it yet (incidentally leaks have suggested apple is working hard on how to get their watch prototypes to be longer lasting batterywise)

          • the Ugly Truth

            If anyone saw where the next “magic” comes from; is it still magic then?

            Before GOOG…there was YHOO. Before YHOO there was…

            GOOG is great at assimilating. I’m not sure if “magic” really applies there.

          • rationalchrist

            @Kenny “… i just don’t see where their next magic will come from, …”

            Boy, you are right, if you can see, then you are Steve Jobs and you should startup your own company. Dumb ass. No one can see iPod, iPhone, MacBook Air, iPad, new Mac Pro, etc coming. Otherwise, they are Apple.

          • Capitalization

            Hey Kenny, what’s with the arbitrary capitalization of words?

          • jameskatt

            Samsung’s only success is from slavishly copying Apple. Otherwise, it is completely lagging in innovation – and profits – from its other products: television, cameras, refrigerators, clothes washers and dryers, and computers parts.

            Where has Samsung innovated when it comes to these areas? Nowhere.

        • the Ugly Truth

          what separates a “primarily” hardware company to a great hardware company?

          what’s an existing great hardware company?

        • http://www.noisetech-software.com/Home.html Steven Noyes

          “Apple is primarily an Hardware company.”

          I think this is the reason Apple has been proven to be a fierce competitor and that is because people actually believe this specific line. Dell is primarily a hardware company (though shift away from it). HP is primarily a hardware company (though trying to shift away from it. Lenovo is primarily a hardware company as is Acer and ASUS and dozens of others.

          Yes, Apple makes the bulk of its money by selling its hardware but that is not what people are paying the premium for. People are paying the premium for a system of integrated devices and services with easy interoperability.

          “That has to come from defining new categories of product as profitable as the Iphone or sufficiently altering existing ones that people return to the store to make a purchase which will not be easy giving the current trend…”

          By the end of the year, the iPad will be a bigger business than all of Google (including Motorola)

    • Brian_M_CDN

      all was before? Google bought Android in 2005, well before the iPhone launch. And Google was around when the iPad was launched. (which essentially the iPad was developed before the iPhone, but Apple waited to launch it until they felt there was a market for it – after the iPhone success)

      Also as was mentioned in the story as well there was plenty of big competition in the mp3 market, and Smart Phone market.

      Apple’s “historical achievements” were not in a vacuum.

      Google has had 2 major achievements – Search and web advertising. Android & web apps to a lesser extent. Android would be major, but Google has admitted they earn very little from it. (At least the last few times I’ve seen anything from Google, a typical iOS device earned them more revenue than the android ones)

  • steve_wildstrom

    “If there’s any area in which Apple can innovate, chances are, someone has already imagined it, written a blog post about it, Photoshopped it, and created a ready-made blueprint for any company that wants to gamble on it. ”
    This is the most remarkable statement in the amazing collection of wrong that you assembled. The idea that imagining, Photoshopping, and writing about a product is the same as creating it shows an astonishing lack of knowledge of how the world works, which is sadly typically of many tech writers today. Just think how much money Apple could have made selling printed-out pictures of iPhones.

    • davemac2012

      “This is the most remarkable statement in the amazing collection of wrong that you assembled.” – Thank you. Great statement!

  • Glaurung-Quena

    Closely related to the “can’t innovate” meme are the various new products that Apple supposedly must start selling to remain viable — products which even a nanosecond of reflection shows are clearly not things Apple is ever going to be interested in doing.

    The prototypical example of this is the expectation that Apple is going to start selling a TV set. The stupidity of integrating a computer (that will be obsolete in just a couple years) into a durable good that people will expect to keep 10 or more years, the stupidity of expecting Apple to stock 50+” panels in their tiny mall stores, the stupidity of expecting Apple (the company that prides itself on the tiny size of its portfolio) to start making something that by its nature demands a huge portfolio of sizes… it just boggles.

    Plus, of course, the “apple TV” is already here, it’s a set-top box that Apple has been adding new features to at a steady pace for years now, but because it’s not (yet) sexy or amazing or world-changing, nobody pays any attention to it. Apple wants to change the world of TV, yes, but they’ve had the hardware to do that finished and on sale for years and years now. What’s keeping them from pushing their TV solution in a big way is that they haven’t finished nailing down the content deals for it, because the media conglomerates aren’t ready to stop squeezing every last penny out of their current business model.

  • Parre

    great article

  • Roo_44

    Steve Jobs himself said it best:
    “Things happen fairly slowly, you know. They do. These waves of
    technology, you can see them way before they happen, and you just have
    to choose wisely which ones you’re going to surf. If you choose
    unwisely, then you can waste a lot of energy, but if you choose wisely
    it actually unfolds fairly slowly. It takes years. “

  • Defendor

    It is ridiculous to expect disruption on a clock tick, which is essentially what many so called analysts are calling for.

    But OTOH, when you look at profit growth. Last quarter Apple was flat year over year, while Samsung profit was up 56 percent.

    This is what really is holding down Apple stock prices, not the lack of disruption.

    The “lack of innovation” talks is just grasping for reasons, why Apple profit growth is stalling.

    Stalling profit growth is the real problem.

    • FalKirk

      “The “lack of innovation” talks is just grasping for reasons, why Apple profit growth is stalling.” – Defendor

      The problem is that if nonsense is repeated often enough, it soon takes on the air of gospel truth.

      • the Ugly Truth

        it already has and Samesung is bankrolling it to ensure that the majority of droid users continue to be willfully ignorant.

    • the Ugly Truth

      for clarity…

      are you saying that the “market” is looking forward & holding AAPL down because of “stalling” profit growth?

      • Defendor

        You put stalling in quotes like I am making something up. Apple’s last quarter was flat, technically earnings were actually down slightly, compared with main competitor in same space growing profits 56%.

        “Apple profits fall for first time in a decade”:
        http://www.bbc.co.uk/news/business-22274324

        When profit stops growing, stock prices usually fall. This is fairly normal for any company.

        Apple has had tremendous growth but this may be sign that growth is actually slowing. We will need more quarters to see a real trend, but it is still an issue when earnings growth stall even temporarily.

        What I am saying is that many so called analysts are reacting to the flat quarter by claiming Apple needs another disruption to grow, but that is an over-reaction, they can simply evolve relentlessly (there usual mode of operation) and expand portfolios (like recent iPad Mini). A low end phone for emerging markets, a big phone for those who want one could all lead to growth without a new disruptive product.

        Samsung has just given early guidance for another quarter with strong year over year growth, if Apple delivers another flat quarter, you can expect a lot more of this noise.

        • the Ugly Truth

          I implied no such thing…hence, the I used word “clarity” before I started my question.

          You provided more of your thought process which I can understand – AAPL doesn’t need another disruption to grow AND if there is another flat quarter, the noise continues.

          Given this scenario, I’d like to add an observation that the “market” has not really been very accurate in predicting AAPL’s growth prospects. Since 2009, it has valued AAPL approx at less than half its actual forward growth metrics.

          For sure, AAPL needs another tipping point for another move up. Would SameSungs’ woes (can’t copy as fast; declining income from supply contracts that used to be fed by AAPL) coupled with AAPL’s resilient performance lead the market to revalue it?

        • End in sight

          Good point, but remember Apple rides a wave of momentum from their historic disruptions. Regardless of noise from analysts, and the reality that Apple will certainly grow, there is that “disruption reputation” in the minds of millions of users who might be left wondering “why the wait and what’s going on?” AND, when other firms are simultaneously causing their own disruptions, it only adds to the customer confusion.

          PS. I find it amazing that your facts seem to be met here with flaming, name-calling and dismissals (author making a quippy comment above about your comment as “nonsense” and not having the decency to discuss the facts). That said, thanks for the sane dialog.

    • Swordmaker1949

      Apple guided lower margins because of introducing the iPad mini. Apple knew that they could not make an iPad with the same functionality as the 9.8″ in an 7.8″ form factor for much less money than they were already making the larger iPad for and would have to accept a smaller margin to allow it to compete against the 7″ tablets made by the lesser brands.

      In addition, Apple invested $20 billion in capital improvements in the last fiscal year that reduced their bottom line that these analyst yahoos totally ignore when looking at the Year over year quarterly profit reports. It was expected. . . but know-nothing anal-lizards pumped out FUD that scared investors who knew even less and who couldn’t be bothered to read the quarterlies, much less the annual financial statements, of the company they had invested their money in.

  • Jurassic

    “The problem with that business model is that it forces Apple to constantly come up with a groundbreaking new product.”

    Coming up with an entirely new product category every year is just bad business strategy!

    Each now product category that Apple has come out with (iMac, iPod, iPhone, iPad, etc.) requires years of development and billions of dollars in investment. Then when it is finally ready to be released for sale, it requires billions more in marketing, support, etc.

    So it is good business NOT to come up with a new product category every year, but instead to support and advance existing ones while they are successful sellers.

    The other aspect of coming out with new product categories is that it is risky. Many of them fail, sending all of that investment money down the drain. Look at Microsoft’s failure with Windows 8, and with the Surface tablets.

    Apple is run by people smart enough to be judicious about the timing of breakthrough new products, and not inclined to have knee-jerk reactions to public calls for “the next big thing” every year.

  • James King

    I generally find analysts to be an insular group. What seems to motivate them is not facts, but relationships. The “don’t bite the hand that feeds you” maxim seems to be their driving motivation.

    I wouldn’t call Apple analysts any more objective than other analysts, they are simply motivated to champion Apple based on their relationship with the company. Just as news has been polarized around poltical beliefs, tech news has been polarized around tech beliefs. Just like you have the Rush Limbaughs, Sean Hannitys, Bill O’Reilly’s, Rachel Maddows, Bill Mahers, etc., you have the Paul Thurrotts, John Grubers, Horace Dedieus and others who have built their reputations on offering polarized perspectives. This applies to you as well John. The problem is that, when truth is treated as a matter of perspective, facts become far less important.

    Writing from personal experience, being objective doesn’t make you any friends. Arguing tech is like arguing politics. Most importantly, there is no penalty for being incorrect or getting your facts wrong. The industry will continue to pay for whatever perspective supports their prejudices at the time. It’s a self-perpetuating system. Facts are simply a casualty.

    • FalKirk

      “The problem is that, when truth is treated as a matter of perspective, facts become far less important.” – James King

      First, most of my posts are not in support of Apple but are against poorly researched and reasoned analysis of Apple. For example, in this article, I am not claiming that Apple will necessarily innovate, rather I am arguing that it is nonsense to argue that they can no longer innovate or that it’s too late for them to innovate in order to be successful.

      Second, I try to build my arguments upon facts although I readily recognize that I a fallible in this regard. If you catch me misstating a fact or have additional evidence that I have not considered, I would be grateful (but not necessarily pleased) if you would inform me of same. :)

      Third, even if one agrees on the facts, one’s conclusions can differ. If this is based on sound logic and analysis, that is all well and good. Reasonable minds can, and will, differ. If it’s based on biases or hypocrisy, then it must be called out and condemned.

      I value your opinion James, so I ask you:

      Have I misrepresented or omitted any relevant facts?
      Is there a flaw in the logic I used to construct my argument?

      If so, be bold and have at it! I shall reply in kind!

      • James King

        To clarify, I think your analysis is some of the most accurate and well-reasoned available when it comes to tech. I think it is “polarized” mostly as a result of having to take positions in opposition to much of the mainstream tech industry. So, in a sense, you end up playing a role though I think your purpose is to provide accurate and ethical analysis.

        “If it’s based on biases or hypocrisy, then it must be called out and condemned.” – John Kirk

        This is where the problems occur. The MSM has the same issue. It’s become somewhat of a hustle. In order to have access, everyone has to play the same game. As a result, the game itself is never really challenged. Even when they disagree with one another, analysts tend to be the mouthpieces of the industry in general. Most seem content to push whatever dialogue the industry wants them to push, rather than offer principled criticism. The analysts themselves often skew topics in the industry’s favor by not presenting information in context. It is a problem with the press in general nowadays. Nuance and context are removed, therefore, every position is presented in its most polarized dimension. That is what you do when you want to influence people rather than simply inform them.

        • FalKirk

          “I think it is “polarized” mostly as a result of having to take positions in opposition to much of the mainstream tech industry.” – James King

          I agree. I would prefer a quiet, well-reasoned debate, but when one side is shouting nonsense at the top of their lungs, a quiet, respectful response cannot be heard. I HOPE that my arguments are as factual and as logical as I can make them, but I AM shouting my arguments at the top of my virtual lungs.

  • http://profile.yahoo.com/VHQMA5ZNKNRBNLRU6AW26P47PM Carlos

    In the recent years, every time I read the opinions of the so-called “experts” predicting the imminent fall and death of Apple, come to my mind the countless articles published since the 90s, when Apple “lost” the war of the OSs to Microsoft. At that time, Apple actually came very close to death, but it was because top management was full of people lack of imagination, lack of talent, that leaded the company to its extinction; were it not for the shareholders’ sheer survival instinct that took to the re-encounter with Steve Jobs. The rest, as we all know, is history.

    Then, as now, everyone was complaining about the lack of innovation in what Apple did, and put special emphasis on how expensive were their products and in the “closed” it was the Macintosh platform (like if Microsoft would allow some kind of opening in Windows). In 1997, Michael Dell went so far as to opine that Apple should be shutted down and return the money to shareholders. That big was the anti-Apple wave. And today, 26 years later, is even larger that anti-Apple wave.

    The huge difference between the ’90s and now is that now Apple is the 800 pound gorilla, its products are leaders in nearly every category in which they compete, has created markets where there was none before and, thanks to the peculiar monetary approach of Steve Jobs, Apple has a treasure chest with almost 150 billion dollars, no other company in the world has such large monetary reserves, something unimaginable in the 90s.

    But let’s talk about innovation. What are talking about Apple critics when they mention lack of innovation at Apple? When they talk about Samsung, they say Samsung is innovative just because it has 3 or 4 models of the same phone. To the simple act of putting more glass and plastic at the same device (and a couple of curious applications), they call this “innovation”!! Samsung produces a lot of different devices, so? who cares? What Samsung has done that had changed the world? Nothing! Absolutely nothing! Samsung is a mere copycat, nothing more.

    What about Google? What had Google done? Besides the searche engine and blatantly copying the iOS and re-name it as “Android”, what else has made Google? On what or where is the innovator side of Google? To make free applications is innovative? (applications that, for the most part, serve to very little or almost nothing). To make products -such as its phones, its lap-tops and its glasses- that nobody buys is innovative? Well, the “experts” say yes. That’s the new character of technological innovation according to the worshipers of Samsung and Google: copy and steal even the smallest detail of what others do. That is today’s innovation concept!

    As I see things, it’s easier than Apple achieve a new success in some field still untouched by them, that the “experts” recognize some credit for what Apple does.

    So, let’s prepare ourselves to witness (again) the end of Apple.

    • End in sight

      Carlos, do you really believe the lunacy of your own words? Google has done nothing? You sound a bit wound up and emotional. Maybe want to take a nap and reflect on Google maps, as just one example? I mean, if it was so bad, why did Apple want to copy it? And let’s take a moment to look at wikipedia together…iOS came out in 2007. But Android started in 2003 and was acquired by Google in 2005. And yet, with those facts, you claim all that Google does is copy iOS. Wow.

  • DarwinPhish

    I don’t think 1 in 10 who write about Apple really know the difference between innovation and invention. Invention is about creating and innovation is about applying. One of the great inventions of the recent past has been the modern touch interface. No one applies this better to products and solutions than Apple and I could argue that no one is really close. Unless iOS is a bust, Apple still has it.

  • def4

    The word “innovation” has been so thoroughly overused, misused and hijacked that there is a heavy cloud of confusion over its meaning.
    As long as it can serve marketing needs of propaganda and chest beating, it will continue to be trotted out.
    For now, innovation=new features, at least as long as Samsung’s marketing budget holds.

  • hjs

    You riff good. A blunderbuss of an article, but perfectly aimed and rigged for automatic fire. :)

    • FalKirk

      “A blunderbuss of an article…” – hjs

      Unfortunately, when everyone around you is noisily “shooting” off their mouth, the only way to be heard is fire a cannon or drop a few bombs. :)

  • sjinsjca

    Nifty article, but IMHO a bit too wedded to the notion of Apple as not-a-first-mover. (1) Consider the Newton, and (2) consider the horrid abortion of an MP3-enabled phone that emerged from their doomed collaboration with Motorola. In both cases the product failed, but they learned invaluable lessons for later… in the Newton, they learned about touch and how it would or wouldn’t work, they learned about the ARM architecture (and in fact were instrumental in establishing it, both in technology and in investment); and clearly they learned a thing or two about the complicated cell phone business from their dance with MOTO. Incidentally, one of those examples involved Steve Jobs, the other didn’t. They’re reflective of a cultural strength within Apple, not a dependency on Steve.

    • FalKirk

      …a bit too wedded to the notion of Apple as not-a-first-mover.” – sjinsjca

      Yeah, you’re right. I didn’t mean to suggest that being a first mover was unimportant. It’s very important in many instances. However, it’s not useful being a first-mover if one moves before the rest of the technology is in place.

      • sjinsjca

        Thanks. I guess the take-away is that first-moving works best when used strategically and with eyes open as a learning vehicle, then following up with aggressive and dispassionate course correction. That’s the difference between leveraging precious early exposure and… well, shooting your wad.

        Follow-through. Maybe that’s Apple’s most obvious secret.

    • Defendor

      Too much semantic play around “first mover”. First Mover Advantage usually accrues to the first “Significant” occupant of a market. For most intents and purposes when we talk about FM or FMA that is what most people mean, not who fumbled the very first of something.

      Apple was the First Significant mover in Tablets for instance and has the FMA.

      IMO the biggest dependency on Steve Jobs. Was as buck stopper, the main guy to say: “No!”. His absence won’t be felt in lack of new products, but in presence of what is allowed to emerge from Apple that perhaps should have had more “No!” applied.

      I think that lack is starting to show at Apple. I don’t think he would have shown/allowed the creation of iOS 7 in it’s current guise. The current commercials seem dreary and meandering.

      • TWF

        I think iOS 7 is amazing. It’s got me genuinely desiring an iPhone. I liked it before, but I love the new design.

  • demodave

    “It’s harder to innovate once you are the incumbent.”

    I think this one simply spells out that it’s harder to win the title when you already have the title.

    I’m a bit of an MMA fan, and it’s interesting to hear the start of the match with “the reigning, defending” and the end “and *still* [weightclass] Champion of the World …”

    It doesn’t sound as exciting as “and *new* [wieghtclass] Champion of the World …”

    When novelty repeatedly comes from the same place, it is somewhat taken for granted, so it doesn’t seem so new. And there are, realistically, things that can’t be innovated. Earnings are earnings. Dividends are dividends. P/E ratios are … well … basically whacked.

    • http://www.noisetech-software.com/Home.html Steven Noyes

      I find it interesting on this idea of “It’s harder to innovate once you are the incumbent.” because I think, in the general case, it is true. I don’t know if you read Horace Dediu’s Asymco blog (if you don’t I highly recommend it) but this is one of the aspects he has been looking at with Apple and other companies. One of the most innovative aspects of Apple really is their corporate structure being organized across disciplines instead of the very traditional product lines.

      In Microsoft, for example, you have a Senior VP (or president or other very high level executive) in charge of Windows or Office or Devices. They are divisions with clearly defined products with a P&L associated to that division. Apple is purely functionally based with top level decisions being made across disciplines like design, software or hardware. The only high level executive directly responsible for the P&L of any product is Tim Cook. This is a typical organization for a small start up but is exceedingly rare in large multi-billion multi-nationals. This organization also allows disruptive decisions being made for the good of the company. For example: Would a SVP in charge of the iPod have had allowed it to be killed by the iPhone or the iPad to kill the Mac? instead of decisions being made for the good of a product/division decisions are made that allow cannibalization of existing highly profitable product lines.

  • Joseph John

    Well Said, Nice Article.
    Innovation a word that’s overly used, misused and often confused in day today world.

  • alaska99801

    Do you all realize that aapl can continue making boatloads of cash, selling more individual phones and tablets than their nearer competitor, (write in everything else, like taking all the profits, etc).
    And Wall Street and the yahoos writing nonsense can still bring the stock down even more. Why not? It’s a herd mentality, but apple fundamentals have not changed.
    I hope they do, and apple can buy back all shares and go private.
    That would be a hoot !!

  • Urbanlegend

    Apple is not innovating but they aren’t completely not innovating either. What was so great recently ? Did I miss something last year ? Was something fundamentally different ?
    iPhone 5 – another iPhone with an additional 0.5″ inch of display, iPad mini – a smaller iPad, iPad 3/4 – another iPad with a hi-res display. iMac – an all-in-one with a slimmer display, MacBook Pro – a notebook with hi-res display, MacBook Air – after years of standing still the battery life is extended thanks to the available hardware produced by other companies. I was waiting for all of this since 2010 and it’s not unexpected, only surprise is that it took so long. Maybe I’m thinking about it in the wrong way but it’s not exactly ‘earth shattering’. iWatch was a reasonably ‘fresh’ idea when they introduced the iPod nano (and AppleTV’s capabilities are still a joke).

    • FalKirk

      “Did I miss something last year ?” – Urbanlegend

      Yes. You missed the fact that that significant innovation doesn’t occur annually; that significant innovation doesn’t run on a schedule or a timetable.

      Complaining that Apple hasn’t innovated in the past year is like complaining that you haven’t seen a rainbow in quite some time, therefore God must have lost the ability to make them.

  • 1brayden

    Finally had a chance to read the article without interruptions or distractions.

    Well done.

  • N8nnc

    Broken link:
    Apple needs new hardware “There’s two reasons Apple needs new hardware: To prove it can still create killer new product categories post-Steve Jobs and because that’s how it makes its money.” – See more at: http://techpinions.com/apple-cant-innovate-anymore-my-a/19583#sthash.WvsPgiqF.dpuf

    I have to say that the piece just before has some amazing guffaws – essentially, “for Apple to be successful, they have to continue to do the things they have shown they can do well & repeatedly” & “they backed themselves into a corner” by being the world’s 2nd most profitable company with $150 bn in the bank. Wish I could back into that!

  • End in sight

    I was really hoping to see a thought-provoking article here, but all we have are quotes, made up quotes and the repetitive, attempt-at-intimidation “gong” of “Apple is not late…so shut up!” It’s not even attempting to have a dialog or make reasonable points, but it’s more like an emotional rant. I can’t believe people read this stuff.

    PS. And using a rainbow to illustrate the release timing for business products? OMG. Lame metaphor. Let’s stick to the fact that Steve is dead…and Steve would never have let his firm go this long without something to show for it. And I doubt that warm fuzzies about rainbows will placate the Apple faithful who are understandably getting impatient when they see their Google-toting friends with the latest and greatest…from last year.

  • Ben

    Blah… Apple inst doing anything anymore. iOS 7 is copying everything android and windows phone have already done and the iPhone is exactly the same as it was in 2007. The blackberry dude was right when he said apple was late to the phone market. They were NOT the first to make a tablet, not the first to make a smartphone, and they are losing what made them… Innovation.