Will 2013 be another year of Apple iteration masquerading as innovation?
Apple ended 2012, Tim Cook's first full year as CEO, with a whimper. Analyst, blogger, reporter and social commentator puppy-love adoration gave way to persistent angst-questions about what's next and why the stock, which soared in September, soured through most of fourth quarter. Shares closed at $549.03, 22 percent down from the 52-week high. I can only describe 2012 as Apple's year of iteration and wonder where will be innovation this year. After all, the bitten-fruit logo company has a reputation to live up to.
By the financials, the Cupertino, Calif.-based company is the golden child. Starting in 2010, money poured in faster than the US Mint could print greenbacks. Apple takes in more cash than any other tech company ($156.51 billion during fiscal 2012), commands the largest market cap ($516.47 billion) and sits on a cash horde of at least $120 billion. But these capital gains come from past strategic investments, lucky timing (transition to the so-called post-PC era) and brilliant brand revival marketing and product execution. For the long haul, I predict that 2012 will be remembered as the year Apple stumbled -- as companies often do at the height of success -- and in this case following the tragic loss of its visionary cofounder.
Apple's problems are many, with Steve Jobs' long illness and death being only among them. There is no evidence of new, breakthrough products or even just breakthrough additions to old ones. Meanwhile, I see Apple losing the core corporate cultural character that made it a survivor and later a succeeder. The rebel with a cause now represents many of the qualities Jobs long rallied against. Simply put: Today's Apple epitomizes "The Man". That's not a good thing.
In December 2009, I brashly posted "Why Apple succeeds, and always will," knowing the headline would draw in readers. But that always is qualified by Apple continuing to use "David Thinking," which challenges the status quo rather than tries to preserve it.
The term describes a trend observed by political scientist Ivan Arreguín-Toft. In the Biblical battle between David and Goliath, the younger man changed the rules of the engagement. Rather than donning armor and sword, he played to his strengths -- being nimbler and faster and handy with the slingshot. David kept out of Goliath's reach, falling him with a single stone shot to the head. In military conflicts, for example, Arreguín-Toft found that underdogs win nearly two-thirds of engagements when changing the rules. Similar trends can be seen elsewhere, such as Apple defying status quo companies like Microsoft.
But four years ago, I warned "the challenge ahead: Resisting the temptation to protect the status quo -- to truly be Goliath". Now Apple is Goliath -- and as bullying patent lawsuits demonstrate, for example -- is every bit about preserving the status quo it represents. David Thinking is largely absent from Apple's current leadership.
By contrast, risk defined Jobs' return to Apple and tendency to establish new rules rather than play by the old ones. The original Bondi-blue iMac is one example (1998, success), while the Power Mac G4 Cube is another (2000, failure). Apple took some of its biggest risks ever in 2001, by, during a recession, releasing iTunes; launching Mac OS X (major platform change same year Microsoft unveiled Windows XP); opening the first Apple stores (while Gateway shuttered hundreds); and debuting iPod (radically new product category for a PC maker).
My favorite Apple risk demonstrates how David Thinking Apple romped competitors. In January 2004, Apple announced iPod mini, in five delicious colors, and started shipping about six weeks later. The music player immediately sold out. By autumn 2005, competitors started shipping iPod mini knock-offs to stores for the holidays. Rather than meet them, Apple did something truly innovative, from a product marketing perspective: Left them behind. The company killed off iPod mini at the height of its popularity, a simply unthinkable act in retail, and replaced it with something better. In September 2005, in a stunning product unveiling, Jobs showed off the diminutive iPod nano, pulling it out of the coin pocket of his jeans. The gum-box sized music player was an instant hit.
Rebel Apple changed the rules, making iPod mini knock-offs obsolete. Six years later, a dying Jobs laid down the status quo mandate, setting Apple on a course of litigation against copycats, rather than innovation that could as effectively dispatched them while offering something more to fans.
Back to risk-taking examples, there is iPhone in 2007. Apple had no expertise making cell phones and launched with a single carrier in the United States. Insanity. Yet, from that investment, the company is transformed, with the handset accounting for 48 percent of revenues during calendar third quarter. Then there is iPad in 2010. Many other companies tried tablets and failed. Apple succeeded and set forth a new product category.
Not for the first time. ARM is mobile processor du jour because of work done years ago by Apple. The post-PC push around smartphones and tablets is another of Apple's pioneering successes (and none the least). Apple imbued iPhone with human-like characteristics, using touch and various sensors, and extended intimacy to tablets. But that's all the past, based on long earlier strategic investments and risk-taking David Thinking.
Being Status Quo
Sadly iteration defines Apple 2012. Where is the innovation? Consider these products.
iPad defies innovation -- it's all iteration. Big deal. So Apple introduced a high-resolution display but did nothing to extend usability, to increase the tablet's intimacy and immersive qualities. With lesser screen, Samsung did more with stylus and supporting software.
iPad mini is risky how? Trendsetting in what way? Apple marched into a burgeoning category with lower-resolution display than Amazon and Google 7-9 inch tablets -- all while charging more. The big risk is cannibalizing iPad 4 sales. The design is all about preserving the status quo by trying to ensure the user experience be consistent between the 7.9-inch and 9.7-inch models. Needed more: better experience.
iOS is all about preserving Apple's established status quo. The user interface has changed little -- well, except for some features, like notifications, copied from Android. Meanwhile, Google advanced Android and provides even more customization options (Hey, dig those lock screen widgets). Apple actually made iOS 6 less by removing Google Maps and YouTube. We all know the sad story about Apple Maps. The one, truly more human-like feature, Siri, still sucks. Google Now beats Siri all to hell.
MacBook Air is changed how? MacBook Pro got a higher-resolution display, which is wonderful for the smaller number of buyers who can afford it. Apple is wicked late offering high-res on laptops. I used a ThinkPad T60p nearly seven years ago with 1680 x 1050 panel. Four years ago, my Sony VAIO Z720 packed 1600-by-900 resolution onto a 13.1-inch display. Apple finally pushed the 13.3-inch MacBook Pro past that this year, with 2560-by-1600 resolution. But is slapping on a new panel innovation?
OS X feels much the same today as 2007 -- well, there are those annoying disappearing and reappearing scroll bars. Apple's big innovation is lower price: $19.99. Rather than risk, Mountain Lion is all status quo. Meanwhile, Microsoft jumped off a cliff with Windows 8 and Windows RT. It's too early to say whether or not the parachute will open, but there's risk either way. The operating system's Modern UI is radically different from any other motif available on personal computers.
iMac is thinner, but what's David Thinking about that? I could go on, but surely the point is made. I see lots of iteration, which isn't a bad thing. Google's model is all about iteration, but going so much faster cumulatively there is innovation. Besides, Google doesn't have the kind of innovation reputation that Apple has.
Looking back at 2012, I see iteration everywhere -- all safely within the confines of preserving the status quo and keeping Goliath strong. If Apple doesn't start taking more risks, of redefining the rules that even challenges its own products (Jobs showed the way with iPad nano), someday the executive staff and employees will wake up and find themselves essentially working for IBM or Microsoft -- during the decline of their respective computing eras and time of dominance.
Photo Credit: Joe Wilcox