New-product innovation is as relentless and unforgiving as it can be rewarding.
Apple's learning that big time these days. That its stock has fallen significantly in recent months isn't the point (unless you've taken a bath on your Apple investment). The point is its innovation train has derailed.
Once hip, now uncool?
Co-founder Steve Wozniak was moved recently to suggest that Apple's lost its hipness in the eye of the electronics consuming public.
Susan Fourtané wrote recently:
By and large, Apple products and their users have been considered part of the cool sphere. Recently, a friend of mine said the iPhone is not cool anymore, because everyone has one.Rest Stop
New-product innovation can be relentless. Sometimes the train derails
and sometimes it pulls into a siding to take on fuel for the next leg.
But in new-product innovation, cool — whether it's in the mainstream sense, or the highly technical component-specification sense — rarely gets you too far. Often cost and functionality win the day, especially if each generation offers a little bit more of each, relentlessly. Here's where Apple has a problem.
Apple's miles-long headstart into so many areas (smartphones, tablets, and the walled garden of music and book sales) has vanished. Consumer ecosystems have sprouted around sites like Amazon and devices based on Android technology. Everything is in the cloud now. That fundamentally changes the value proposition of a given electronic device. If all my stuff is in the cloud, why do I need an expensive Apple product to access it when a lower-cost and highly functional Android product is available? I don't.
Moore's Law victim
The problem is compounded because these devices are wildly powerful today; the need to get a faster processor every 18 to 24 months is over. And with everything in the cloud, you don't need more hard disk or flash memory capacity. What you need is faster, more pervasive bandwidth.
There's no need to upgrade, as Douglas Alexander wrote recently. He's happy with his Apple iPad and sees no reason to move to another platform or to the next Apple product.
Every electronics company hits this wall sooner or later. I think of Linear Technology which churns out billions of analog parts, some of them for pennies each. But the company won't do a new-product introduction unless its solution doesn't exist on the market or is not markedly better than existing products.
Other companies gain traction with a new product innovation and then claim more innovation in future generations by offering a new package or some small tweak. That's a race to the bottom.
Apple's gotta-have-it days are on hold for now. An iWatch? Maybe that will rekindle the fever, but it doesn't feel like it.
Tim Cook's a smart guy. I'm sure he's thinking that the key to that rekindling lies outside of hardware innovation… in services perhaps. Apple's iTunes innovation was in that vein and was hugely disruptive.
There's something out there — outside the shiny Consumer Electronics Show gadgets — that will constitute Apple's next big new-product innovation. Or not.