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When the Innovation Train Derails

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.

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.

Cloud effect
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.

24 comments on “When the Innovation Train Derails

  1. William K.
    March 16, 2013

    There is perhaps some innovation still going on these days, but not as much. In some areas that is obviously caused by fear. All of the radio stations are sounding alike, because somebody found one formula that made one station profitablke in one market, and because all of the staions, almost, are owned by a very few companies, those who would try something new are instead listening to the shareholders and following that one formula.That is what a board of directors is for: to maximize the short term profit. All other considerations are a very distant second place.

    A similar thing happens in cars and electronic devices, but now there is a great cry for “product differentiation”, and so while the products are all very similar there is a huge race to add the most features, until the product becomes a bit like the overgrown “Swiss army knife”with 253 blades, none of them very useful.

    And the other thing that has damaged much more than creativity is the lack of the ability to focus on one thing, So many people are just tot ally able to focus on anything long enough to grasp what it is, or howmit works. Probably we are doomed.

  2. prabhakar_deosthali
    March 16, 2013

    In my opinion a company which constantly innovates its products , at a speed faster than the consumers can cope up with ,kills its own still-good products. This puts a constant pressure on the company's supply chain and the sales and distribution network.

    If the company itself declared its product as obsolete by bringing in a new product then it becomes counter productive .

    It looks like Apple is falling into this trap.

    Constant renovation brings in fears of obsolescence in the minds of the consumers who want their purchase to give some return on investment. Only some enthusiast consumers are likely to blindly dump their old product just because a new product has been introduced.

  3. _hm
    March 16, 2013

    It is very interesting to read that onus for innovations and novel products introduction is only on Apple, no Samsung or Google or others. That proves that Apple is most innovative organization in the world and thier products are still coolest of all. Kudos to Apple and we eagerly look forward for more innovations. Once introduced, all including Samsung and other will almos copy and tag behind it. Apple provides path for American lead in research and design.

     

     

     

     

  4. Anand
    March 17, 2013

    Apple's learning that big time these days.

    @Brian, thanks for the post. Not only Apple's innovation train has derailed but its also finding it difficult to retain the iconic iPhone name trademark in several countries. For example in Mexico's Supreme Court has ruled against Apple in a case against a local tech company over the “iFone” name in the country.

     

  5. Anand
    March 17, 2013

     Apple is most innovative organization in the world and thier products are still coolest of all.

    @_hm, but things are slowly chaning. Companies like Samsung are giving tough competition to Apple. I think Samsung 4 release got the same attention and hype which usually iPhone used to get. This clearly shows that people are expecting more from other companies as well.

  6. Ashu001
    March 17, 2013

    Prabhakar,

    Thats true!

    Unfortunately whether Apple like its or not it has dug its own Grave here.

    If they stop Innovating their Products are considered Uncool and if they keep innovating(which becomes Impossible after a point anyways);they cannabalize on their existing Product profile-Basically they are stuck between a Rock and a Hard place!!!

  7. SP
    March 18, 2013

    Absolutely agreed, Apple has itself created such a high standard for yheir products that it has become quite a pressure to remain so trendy. When you have Apple product in mind you think of style and cool factor first and then ofcourse the customer frendliness. I guess after Steve, there is lot of pressure on Apple, the management also might be getting continously compared. I think the industry should give them some time , they will bounce back.

  8. Taimoor Zubar
    March 18, 2013

    Apple has itself created such a high standard for yheir products that it has become quite a pressure to remain so trendy.”

    @SP: I agree. The pressure can sometimes be very harmful for the company. You may end up rejecting good ideas because they might not be up to mark set by your existing products. Apple needs to figure out a way to deal with this pressure.

  9. Taimoor Zubar
    March 18, 2013

    “..onus for innovations and novel products introduction is only on Apple, no Samsung or Google or others”

    @_hm: I'm not sure if I'd agree with this. I think it depends on industry to industry. If you're talking about smartphones, then yes Apple has stood ahead of Samsung and Google in terms of innovation. However, if you're talking about search engine or other online products, Google takes the lead in innovation there. Similarly, Samsung has also been innovative when it comes to display technology.

  10. Taimoor Zubar
    March 18, 2013

    Only some enthusiast consumers are likely to blindly dump their old product just because a new product has been introduced.”

    @Prabhakar: In Apple's case, these enthusiasts are the ones that make up majority of their market. While you may expect consumers to behave rationally and not so easily dump their investments, the opposite has been happening in Apple's case which makes you question the rational thinking of Apple users.

  11. chipmonk
    March 18, 2013

    Google stock is stable at $ 800+ but AAPL has dropped by 50 % to $ 400. So what are Apple's options these days to pull out of a “slump”

    Start Software based “must have” services for consumers. Video delivery to homes ? Home automation & security using Mobile devices ?

    Totally new class of hardware beyond the iPhone & iPad e,g. the iWatch to wow the masses and manufacture them in house with a few proprietary technologies to prevent IP loss.

    Improve the iPhone and iPad at the systems level, beyond what component suppliers like Samsung can dream of.

     

     

  12. FreeBird
    March 18, 2013

    I think Apple, like many companies, is now caught in the Wall Street trap. Why does Apple come out with new products every six months? Not because the products are necessarily better, but because shareholders expect them to. Maybe Dell has the right philosophy–if the market slams you enough for lack of innovation, go private for awhile. It's better than channeling a lot of R&D into incremental upgrades (iPhone 5 vs. 4S); new iPad vs. iPad 2. Maybe HP should consider the same strategy.

  13. Eldredge
    March 18, 2013

    Apple's miles-long headstart into so many areas (smartphones, tablets, and the walled garden of music and book sales) has vanished.

    Headstarts can vanish very quickly. I picture it very much as through competitors are attached to the lead innovator by a rubber band. The larger the innovative leap of the frontrunner, the faster the competitors catch up once pull is there to drive them.

  14. SP
    March 19, 2013

    Ya consumer electronics is a tough business to be in. Especially dealing with smartphones. I guess its like showbiz, when you are rising everything falls in place but then its really tough to maintain, lots of expectations gets set. THe media, the people and the peers. Its too just too much pressure to stay ahead in the markket.

  15. t.alex
    March 19, 2013

    Freebird, I think you are completely right. It's all because of shareholders and peer pressure. Apple'd better ignore all of these for a while to come up with a better product.

  16. Taimoor Zubar
    March 19, 2013

    @SP: I also wonder how many electronic manufacturers go ahead and do a forecast of the consumer demand themselves rather than relying on the estimates by the consumer good manufacturers. Assessing the consumer demand themselves can give them more accurate figures of their own demand and they might be able to reduce the volatility.

  17. Anand
    March 19, 2013

    Apple'd better ignore all of these for a while to come up with a better product.

    @t.alex, I agree with you. Apple should ignore all this and better concentrate on innovation. I am curious to know what will Apple's next iPhone killer feature be?

  18. t.alex
    March 19, 2013

    Just guessing: maybe it will learn from Samsung to do a flexible iPhone.

  19. Ariella
    March 19, 2013

    “I am curious to know what will Apple's next iPhone killer feature be?”

    @anandvy that makes me think of those Samsung commercials that mock the Apple fans waiting in line for the new phone by showing how Samsung already offers more advanced features. The fans look on wistfully and then say, “maybe the next one.” 

  20. SP
    March 20, 2013

    @Taimoor, i think they rely on the forecast provided by consumer good manufacturers. It would not be that easy for the the electronics manufacturers to directly approach or get the data from the consumers.

  21. SP
    March 20, 2013

    ya i dont know why samsung has to do this kind of advertsement, Its not that healthy way of competition.

  22. Ariella
    March 20, 2013

    @SP you think so? Business Insider reports that the ads work: 

    On November 2011, Samsung started running ads mocking Apple's users. This was a high risk maneuver. Lots of companies have tried to make fun of Apple users. None had succeeded.
    But Samsung's ads were funny and well done. They also benefitted from good timing. Apple was moving from righteous underdog to the world's most valuable company. It's hard to be hip and cool when you're the biggest company in the world.
    “Samsung has been scoring points with its people-based ads – most of which play off some growing negative perceptions about Apple,” wrote Ken Segall, a former ad man who developed Apple's “Think Different” campaign with Steve Jobs.
    Where Apple's lines to buy iPhones were once seen as the sign of a company with a loyal following, Samsung turned it into the sign that you're a sucker lining up for years-old features.
    There's truth to the idea that Apple doesn't roll out the newest features on its phones. Despite its reputation for innovation, it can be a slow adopter. This is because it doesn't want to add features for the sake of adding features, it wants to only add features that work and improve the product from its perspective.
    Regardless of Apple's reasoning for doing what it does, Samsung is successfully landing blows on Apple. As Segall says, “While you can still argue that Macs and i-devices have a ton of appeal, you can't argue that Apple is still untouchable when it comes to advertising. The fact is, it is being touched – often and effectively – by none other than Samsung.”

    Read more: http://www.businessinsider.com/samsung-is-killing-apple-with-ads-just-like-apple-killed-microsoft-2013-2#ixzz2O5SLkhrg

     

  23. Brian Fuller
    March 20, 2013

    It will be interesting to see how that plays out at Dell. They have some more time to work with as a private company, but they still have investors who want a return. 

    I'd be curious to know whether, as a private company, they're incenting their employees any differently to drive innovation. 

  24. SP
    March 21, 2013

    @Ariella I think its tough to retain the top position in business. its defintely not goody things that one has to do always. And of course the advsertisement doesnt follow too strict laws.

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