The Explanation for Apple’s New Product Drought

| Hidden Dimensions

“It shouldn't be easy to be amazing. Then everything would be. It's the things you fight for and struggle with before earning that have the greatest worth." -- Sarah Dessen

Most every publication has expressed dismay over Apple's new product drought. A lack of innovation is often cited. In fact, something very big may be coming, and that takes time to prepare. I'll try to explain.

What would you do if you were the CEO of Apple and had several billion dollars are your disposal for R&D. What if you had the brightest and most experienced engineers on the planet? How would you go about evaluating Apple strengths in the face of new competition?

One of the ideas that I dismiss is that Apple has run out of gas. That the company is too big and stupid to innovate. That CEO Tim Cook doesn't have the Apple DNA.

It's easy to criticize Apple. It makes you look erudite. What's more, publications live and breathe new Apple products. It's how they generate reader excitement. So when publications can't generate excitement with a constant stream of new Apple products, they turn the tables and attract reader attention by claiming there's something wrong with Apple.

It's a very arrogant approach.

Apple's Strategy

Apple's strategy has to involve dealing with competitive threats by evaluating its own strengths. For example, when Microsoft got really rolling with with Windows 95, Apple's hegemony in the GUI + PC world was undermined. Right after Windows 95 was released, Apple got into serious financial trouble. Did Apple fold? They almost did, but Apple finally figured out how to use its strengths to fight back. In a few years, Windows XP was a mess, crippled by security blights and UNIX-based Mac OS X was the darling of the OS world.

To say that Apple isn't smart enough or capable enough to fight Android today with a winning strategy is the Big Lie. It's an idea pushed by people who are not enthusiastic, for not very good reasons, about Apple as a company. Ignorance breeds fear.

Long Term Planning

On of the responses from Tim Cook on Tuesday that struck me was his comment about giving up short term profits for the long term benefit of Apple. What that tells me is that Apple is investing in technologies that are larger in scope than a minor product update every few months to satiate the observers. I believe Apple is working on something that's derived from its strengths as a company, integrating hardware and software, user interfaces, security, and enriching our lives -- not just throwing geekware at us. Sometimes that means we have to wait.

During the earnings call, Mr. Cook was asked about the 30 percent growth rate of the smartphone industry by Toni Sacconaghi of Bernstein Research. Apple doesn't seem to be achieving that number. There seemed like a disconnect between the very attractive products offered and the iPhone sales growth. Mr. Cook said something remarkable (after he addressed iPads):

I take your point, if the [smartphone] market grew by 30 percent .. we grew less than that... this point is not lost, and we do want to grow. We don't view it, however, as the only measure of our health. The things that are very important to us, in addition to market share and unit volumes, include things like customer satisfaction ... customer loyalty and repurchase rates ... the ecosystem for developers .... Three out of four customer [app] dollars are spent on iOS apps.... These other things for us are extremely important because we're all about customer experience and enriching lives."

What that means to me is that while other companies are all about creating products that look like Apple's, playing follow-the-leader, Apple is doing the heavy lifting when it comes to the underlying infrastructure of its products and ecosystem. In a competitive environment, that means more than just throwing out some hardware and putting a pretty, imitative face on it.

Clever Exploitation of Market Understanding

Another thing that struck me from Mr. Cook's remarks were the affirmation of the Macintosh. I addressed the news side and his quote right after the earnings call in: "Tim Cook Argues That Macs Remain Important."

The idea Mr. Cook expressed was, I think, that PCs are failing, by contrast to tablets, not because they are PCs but because of the way PCs work (or don't work) for customers. What that means is that if Apple's PC (a Mac) is friendly, secure, and works well in a tablet environment, geared to the heavy lifters, the creative professionals, then future Macs, while cannibalized by the iPad, will themselves cannibalize the PCs. This is a remarkable observation and tells me that Apple, Tim Cook and his executive team, really understand the market.

You would't know that from reading the various "Apple is doomed" articles that express child-like resentment that Apple isn't on their editorial schedule for product rollouts.

What's Taking So Long?

We think we know what Apple is up to, but many just don't want to assume that Apple will make good on its promises. Let's look at some possibilities.

1. iOS 7. There has been a major shuffle in the iOS leadership. It takes time for new leadership, Jonathan Ive, to conceive and then engineers to implement a new vision. That takes time, and it's one of those long term projects for Apple's future. This is going to take some extra time. Patience is called for. And the same applies to how iOS 7, in turn, relates to OS X 10.9.

2. ARM-based MacBooks. Tim Cook said that Apple would continue to invest in Macs and innovate. What if Apple were able to add virtualization hardware to low-power ARM CPUs in MacBooks and then deliver awesomely thin and beautiful MacBooks with Retina displays and 15 hour battery life?

3. New Product Category. Tim Cook affirmed to Piper Jaffray analyst Gene Munster that there will be a new product category. Do we trust Apple, given its track record, to deliver an awesome new product that works for us, solves a problem and enriches our lives? I do, but I don't think many observers want to trust Apple to deliver that. Nor do they have the technical experience to envision how that might happen -- until after Apple delivers.

4. New services. We strongly suspect that Apple is working on a music streaming service, fingerprint logon to iOS, NFC and mobile payments, with fingerprint authentication, and perhaps services associated with a new HDTV viewing experience. These items, cited just as examples, take some time to fully bake. When a company is investing for the long term, especially to combat the imitators, it's not sufficient to simply throw out a few new features that nobody uses, every few months, just to grab some headlines. As Mr. Cook said above, Apple's motivations run deeper, and that requires real work.

So, from Mr. Cook's public presentations and all his earnings call insights into Apple, I get the feeling that Apple is in fine shape. Some new technologies and fundamentals are taking some time because valuable changes that improve our lives often require the coordination with business partners.

On the other hand, shallow analysis says that Mr. Cook is solely responsible for Apple's stock price, that he has no product vision, and that Apple can't deliver exciting and life-changing new products on schedule anymore. I've seen absolutely no evidence to back that up.

I think it's just frustration, shallow, self-serving analysis, and a lack of a true appreciation of what the real Apple we know is capable of based on what we've already seen. Soon, it will be show-me time. I think Apple will deliver on its own schedule, doing what's best for the company and its customers in the long term.

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Comments

John Molloy

I think that they also may be extracting Samsung’s components from the products so they may have to wait for the new suppliers to get their act together.

BurmaYank

What I hope Apple is focusing on (as I’ve said here some time ago, in other words) is on revolutionizing hardware fabrication by designing ultracustomizable and completely interchangeable fabrication smart-modules, which could be centipeded into a single assembly line for fabricating every Apple device, in one start-to-finish process.  And thus, bring all hardware fabrication back to the USA, where this technology would enable these fabrications to be done more cheaply & qualitatiively than anywhere else that uses only current technologies such as at Foxconn, TSI, Samsung, Intel, etc., and to be done where the process design engineers would once again be “living” in the same house as the processes they are supposed to be husbanding. (Using 100% renewable energy from AZ wind-towers or NJ/VA ocean-bed turbine-fed powergrids, etc..)

If Apple could create such a universal super-transformable fabrication module for running all its factories, assembly lines should be easily convertible to new or modified product production in less time than a shift change (instead of in intervals of days or months) and for orders of magnitude less money and labor overhead.

Apple would then have created the first fundamental change in mass production since the invention of the assembly line with interchangeable parts.

And Apple could then transform industry at large (as Eli Whitney and Ford did http://en.wikipedia.org/wiki/Assembly_line) by licensing or selling these modules to the world’s manufacturers big and tiny,

geoduck

One cause of the ‘new product drought’ might be the ecosystem. In days past when iMacs, Mac Pro’s, iPods, and iOS devices were separate lines, Apple could release them throughout the year. Now OS-X and iOS are sister products, iPods, iPads, and iPhones are brothers, devices must be seamlessly integrated and compatible with computers, everything Apple makes is closely tied to everything else they make. They CAN’T make a huge change to any hardware or software line without it having significant impact on the rest.  Apple’s integrated ecosystem requires them to keep updates of different product lines in synch.

I wonder if this is why the MacPro is laying fallow. Apple might be doing a full re-engineering of the computer to more closely tie it into the rest of the ecosystem.

Lancashire-Witch

Or it could just be that meteoric growth is difficult and time-consuming to manage.

For example . How many employees does Apple have now compared to (say) 5 years ago?  Someone needs to decide what they want them to do when they all come to work each morning.
OTOH - they have the resources to tackle huge projects.

I don’t expect Apple to be as fast on its feet anymore with new products. They may still be on schedule or the schedules may have slipped. Who knows, John.

But I’m truly amazed they still spin (not just turn) the inventory. 90- Phew!

Dave Barnes

I would settle for new releases of iWork, Aperture, etc.

Gareth Harris

geoduck is on target. Apple has developed an entire system of products on the UNIX/network platform, collecting various technologies along the way. The halo of each product connects to the other.

It is time to deliberately consolidate, plan and perfect the ecosystem as a goal. The platform is Apple’s product. [apologies to SUN]

mhikl

“It makes you look erudite.” Not really, John. It does just the opposite, except possibly to the stupid. The negative critic is cheap ’n easy and stands proud along with the ostrich whose head is planted out of light. The naysaying Apple troll and hater is both, cheerfully heralding the demise of Apple on Apple and other tech sites often supporting his dance with clever words. But gift of the gab does not make up for lack of insight and understanding. Ye, John, have the gift of pencil gab backed up with analytic skills and fine intuition. There are a few others like you out in the Wild Wild Field of Tech, (http://stratechery.com is a find) but fewer than we’d like. Of course Apple is innovating. No one else is and if Apple doesn’t show MS and Samsung and the rest of the envy racers how it is done, what ever would they have to copy, even if badly. Apple is both hare and tortoise and uses both legs and feet in the most efficient way to serve its goal.

Marathon runners don’t live very long. Apple is the great laid back sprinter and plotter and will undoubtedly be round for a longtime, just as the great genius loci planned when once he walked his good orchard.

Christopher Pelham

I think the comment about it being more important to keep the family of products in sync, because they now all interoperate in a big ecosystem, is spot on. If the new Mac Pro may get the next Thunderbolt and 4K support, then they will want to release a 4k monitor, perhaps a 4k iMac (or the constantly rumored TV….). Fingerprint signon could be added to everything. I know I will resent still having to type a password on one device if I can instantly thumbprint in on another. The next A/C wireless should come out on all hardware at once (which will require new Time Capsules, Airports, AppleTVs, etc.

And some of these things may require maturation of price points be reached for parts created and mass produced by others. And clearly the rest of the world does not come out with mind blowing new parts every few months either.

MacFrogger

BurmaYank said: What I hope Apple is focusing on (as I’ve said here some time ago, in other words) is on revolutionizing hardware fabrication by designing ultracustomizable and completely interchangeable fabrication smart-modules, which could be centipeded into a single assembly line for fabricating every Apple device, in one start-to-finish process.

This is a really intriguing idea, and to some extent is being pursued by Volkswagen on a global scale.  A limited set of standardized interchangeable components that can be assembled into unique ways to produce a variety of high quality products.  Major savings across the board - I encourage others to read up on this strategy!

Paul Goodwin

And in reality, the so called drought isn’t any longer than the periods between major impact product release that have gone on since the Bondi Blue iMac in 1998. About every 4 years Apple has launched a market trend setter, and designs for all to copy. In 2002, four years later, it was the iPod and the G4 Flat Panel iMac. In 2006-7 the MacBook, MacBook Pro, and iPhone. In 2010, the iPad. They’re not off their schedule at all. A much larger portion of the press talks about Apple these days and doesn’t know Apple or their strategies at all.

Paul Goodwin

Good article John

Lancashire-Witch

” It’s easy to criticize Apple….”

I think that is part of the problem. iCloud, Maps, Browett - are just 3 examples of easy targets.

It’s strange how most of the mainstream media set their own expectations then become disappointed and critical when they don’t come true. No TV yet, for example.

10 years ago they didn’t care!

wab95

John:

Perhaps it’s my current location, but I’m definitely having problems uploading any comments more than a line or two to TMO’s columns, or at least yours, of late. I just tried a moment ago while logged in, but it vanished into the ether, and in my haste, I neglected to save it elsewhere before uploading.

In any case, excellent analysis.

wab95

John:

Excellent analysis.

If I may add a couple of comments, they would be these.

First, not only is Apple’s history proof of principle against the lie that they are incapable of fighting back against Android, the response of the Android camp (and for that matter MS and the Windows world, and in some cases Amazon) to rumours (not hard evidence mind you, rumours) of what Apple might be up to with a ‘me too’  is evidence enough that the industry recognises not only Apple’s fight capacity, but its leadership and driving role in continued elaboration of the post-PC era.

I recall, as a quite young lad, how many of my mates would proclaim some band of the month to be better than than the boys from Liverpool, and how the Beatles were a spent force, over and done. After a few weeks, it would be another band, again with the Beatles a has-been fad. Today, I couldn’t tell you who most of those comparison bands were if my life depended on it, but the contribution no less than the genius of the Beatles in shaping the music landscape of that period is universally celebrated. The same will be true of Apple and ‘everyone else’ for this industry, certainly in this period. That a company like Samsung or Amazon can come up with a product, service or solution that does what Apple’s does, perhaps with greater specs or more features, does nothing to change the company’s contribution. Moreover, such competition is healthy for the industry, and should be seen as such, and not be interpreted in terms of a zero-sum game, with Apple doomed.

Second, the idea that the innovation of new consumer-ready products should be linear is nonsense, especially if that expectation is asymmetrically applied, in this case, to only one company, as an indicator of its health, but not to others. In the field of medical research, it is understood (usually by most stakeholders) that it is one thing to conduct a limited and controlled clinical trial, and demonstrate efficacy in a single outcome, and quite another to take that to population scale under real world conditions, and expect a similar effect on that outcome, let alone others that you’ve not yet tested or even considered.

Similarly, with technology, it’s one thing for engineers to develop something that works in the lab and under specific conditions, like NFC, and yet another to take that to scale and make it consumer ready with a guaranteed consistent and meaningful user experience. The infrastructure that must be built, and the variables that need to align in order to create such a consumer ready environment are substantial. We almost never hear (read) of the inconsistent and almost non-existent opportunities to exploit NFC on enabled Android devices; no one appears to hold any of the OEMs to that standard, but you can bet that there would be an outcry loud enough to drown out the much overblown Apple Maps preterm delivery were Apple to feature NFC ahead of such environmental readiness.

While I don’t pretend to know what Apple’s next new products, or even product refreshes, will be, I am confident that consistent and best in class user experience will be their attributes.

chrisxxiv

  Sure !  I would prefer that my stock had staying power in the seven hundred
range and even take a shot at the lofty one thousand mark, but most of all,
as someone fairly new to the whole Apple universe of products,  I still am in
love with the fact, that when I want to use the fantastic desktop all in one or
my Airmac or ANY Apple product or service ... I do not have to worry about it crashing or freezing up and the PC doctor trips are eliminated !!  Just the basic stuff ....now the psychiatrist is pissed off <grin> stress reduction sessions
have been eliminated…almost.  Just think, if you still owned PC’s and Microsoft stock ... you would still be cursing your computer and MSFT at $705/share ??
Those folks dream of $35/share.  Count your blessings or go buy a PC and some msft stock…then you really will have something to b&^ch about !

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