If you view the glass as half full, Apple is fine. If you view the glass as half empty, Apple is in trouble. What’s the real story? Is Apple operating under Steve Jobs’ shadow, or is it in the process of re-inventing itself again?
Only The Shadow Knows
Allow me the discretion to argue both sides of the same coin. First, Apple’s market share for iPhone and iPad is dwindling. Product margins are going down. The stock price is $200 a share off the high point a year or so ago.
Those are valid points and worth of a measure of criticism by shareholders, technology pundits, competitors, and Apple customers and followers.
As we know, though, headlines don’t tell the complete story. Sometimes a complete story doesn’t even tell the truth.
So, what’s really going on at Apple? First, a look at the numbers. Yes, the stock price is down from the high point, but back up by a third from the low point.
While iPhone marketshare diminishes under the onslaught of free to nearly-free Android based phones, Apple is selling more iPhones than ever.
Second, one can easily argue that Apple hasn’t launched anything new or innovative since Steve Jobs died. That may be true, but seems to assume that market disruptive innovation works on a schedule. It does not.
Historically, Apple disrupts an industry with an amalgam of innovation (iPhone was not the first with a touch screen), then iterates the product line until a new disruptive product is launched.
That doesn’t happen on a schedule. Mac in 1984. LaserWriter printer in 1985. iMac in 1998. iPod in 2001. iTunes Store in 2003. None of those products were the first of their kind.
The iPhone hit the streets in mid-2007, and the iTunes App Store a year later. It was three years after the iPhone launched that Apple introduced the iPad.
All those products disrupted the status quo and changed the direction of the market, to the detriment of competition, and to Apple’s benefit. That’s disruptive innovation.
That Was Then, This Is Now
Alright, Apple, what have you done for me lately? It’s easy to say, ‘Not much!‘ but that wouldn’t allow for Apple’s continued iterative innovations.
The MacBook Air line gets the best battery life of any major notebook line. The iPhone 5 sells very well, but so do the older models, iPhone 4 and iPhone 4S, both at lower price points and lower margins.
Iterative innovations are a fact of Apple’s life, and much of the company’s effort is devoted to improving the current line of products, while working on ‘the next great thing‘ behind the scenes; in secrecy.
Yet, it’s been over three years since the last disruptive product was launched, the iPad, and sales have actually declined. Tablet competitors have lower prices and higher resolution screens (albeit with lower battery life). Smartphone competitors have lower prices and larger screens.
Let’s take a cue from Apple’s Mac line of personal computers. At best, Apple maintains a 10-percent to 15-percent marketshare among many competitors with lower priced products. However, Apple maintains about 50-percent of the profit share, and over 30-percent marketshare for the price points where the Mac competes.
In other words, Apple owns the high end, high profit, high margin end of the spectrum. That seems to be the case with smartphones and tablets, too. Apple is chugging along pretty much like Apple has always worked.
Financially, Apple is healthier than any three of the company’s competitors. Apple usually has the highest customer satisfaction ratings (unless you count surveys taken by Samsung’s ad agency and PR company), which bodes well for sales of future products.
Apple has almost 600-million active iTunes accounts, which indicates a thriving and robust customer base. App developers make far more money selling iPhone and iPad apps than selling Android apps. Apple is in a good, healthy position for the future, so what’s next?
I see three basic areas for Apple to apply the historic disruptive innovation. Television. Wearable technology. Competitive pricing. In TV, the company’s Apple TV is the most successful and most used third party online streaming boxes, but hasn’t reached a disruptive stage. There’s plenty of talk about an Apple television, and wearable devices, such as an iWatch or iGlasses.
First, though, Apple is probably aiming to spread itself more to the masses with more competitive pricing for the flagship products, iPhone and iPad, both of which are expected to have a broadened product line by the end of 2013. In other words, more Apple products in more hands, which means more customers. That could set the stage for wearable devices, too.
When? As noted, disruptive innovation doesn’t work on the same time line and schedule as iterative innovation. Apple can refresh the current product line once or twice a year, but a new product category isn’t launched based upon the calendar.
Apple CEO Tim Cook’s future at the company may well be revealed in the company’s next two new product launches. If all goes well, and the company doesn’t stumble, Cook will be around a few years. If not, look for Apple’s board of directors to look for the future. Where?
Yahoo!’s CEO, Marissa Mayer. Check out Nicholas Carlson’s ‘Marissa Mayer: The Unauthorized Biography‘ to see the similarities between Mayer and Apple’s Steve Jobs. There are plenty.