The last few Apple keynotes were pretty exciting. Again, I am no Apple fan. But post Jobs, the key notes have been a tad less interesting. Even the fan boys agree. One must give Apple the credit of making the first tablet and smart phone that consumers really desire. They were not pioneers in either sector but were the most profitable. In economic terms, this meant they were fast second movers. The first tablets were promoted by Microsoft and smart phones – a combination of both Microsoft and Palm. These were the first movers. Dependent on industry, there are both advantages and disadvantages to being a first mover, fast second or late comer. The first mover gets all the patents but spends the most cash because it is costly to search for something new. The second mover can become the most profitable by avoiding the said cost and having a market semi prepared. The late comer has it easy if the product line or technology last long enough for it to enjoy the rewards of coming in late. So looking at the trajectory that Apple took here’s breaking it down.
Innovation is Slowing
The iPhone 4S and ‘New iPad’ has shown one thing – innovation has slowed tremendously. The iPad is really just a mega sized iPhone and continues in the same motion in terms of innovation. A high resolution ‘retina’ display is always tremendous. I only bought the phone after the ‘retina’ display was launched. Two years later the iPad gets it’s own version.
Siri wasn’t a great step up, ask any 4S owners if they depend on Siri. Apple fan boys have admitted that, like all voice command programs, Siri doesn’t work all the time. I did not upgrade for a good reason.
Apple’s focus on toning its OS down to make it easy on hardware components is excellent at the start but backfires at the end. No one really cares if the processor is faster because 90% of the users do not need a faster engine for a machine tuned to run smoothly on slow processors. What we are seeing now are spec bumps. Here’s a faster CPU, here’s a faster GPU. But that’s a bout it.
Apple Out of Steam?
Maybe but not by a long shot. It is common that innovation slows at this stage. What is interesting is how quickly innovation came to an end for Apple. Yet again, Apple is a company about the polish more than it is of the innovation. This 6 year iPhone and 3 year iPad innovation path is short but expected considering that the ‘New iPad’ follows a similar trajectory to the iPhone. What is left is simply software side innovations that are far and few in between unless Apple acquires technology to do so in the same way that Siri was built by a company it acquired.
The tablet market is lopsided currently because there is no optimized operating system for tablets besides iOS. Android was never made to be a tablet OS. Honeycomb was a step up but not really optimized. Windows 7 is in the same spot. Apple’s further domination is expected for a year at least. However, after Windows 8 launches, Apple will have a real fight in its hands. Windows 8 in many ways promise to offer more than iOS can because of its no compromises stance. In fact, productivity values and cross platform linkages on a Windows 8 tablet already sees greater potential than iOS that is clearly delineated from Mac OS.
It will be wise to hold Apple stocks until the iPhone 5 is announced. If nothing but a spec bump on a tiny redesign is only introduced, the trajectory is clearly shortened and it might be wise to sell it post iPhone 5 launch. The iPad of 2013 will probably not offer much. Schumpeter economics is fascinating yet driven by good ol’ common sense.