Apple is, arguably, the most valuable company in the history of business. Sales, profits, PR; by whatever means one would measure a business, Apple is the king of the proverbial hill. However, in the midst of all that happy fun time, members of the tech industry and media are asking, “Has Apple jumped the shark?”
“Jumping the shark”, for those of you unaware, is when a person, business, event, etc. reaches the zenith of its potential, and shortly thereafter enters into decline. It references the fifth season premiere of Happy Days, during which Fonzie, played by Henry Winkler, literally water-skis over a shark. That represented the high point of the series, and the show failed to reach those lofty heights ever again.
The original iPhone was the first device of it’s kind. There was nothing else like it on the market. It was a profound departure from everything that had been done in the mobile space up to that point, and represented the future of mobile devices. In the intervening years, Apple has continued to push the envelope; the iPhone 3G, 3Gs, and 4 were all excellent devices that introduced numerous additional features that forced Apple’s competitors, namely Google, Microsoft, and RIM, to innovate (and sometimes imitate) or perish. The same pattern is evident in the iPad; an immensely innovative original product, consistently improved upon by Apple and ultimately imitated by its competitors.
However, Apple did not create the smartphone or the tablet PC. They were old ideas before Apple ever released products in those spaces. Traditionally, this has always been Apple’s MO: wait for a market to gain critical mass, then improve massively on existing products and reap the rewards.
The problem with Apple’s strategy is that it relies on a series of Great Leaps Forward to ensure market dominance, because the competition will eventually either be removed from the market through consumer choice or adapt and thrive.
Now, normally it would be premature to look at Apple’s product portfolio and balance sheet and say they’re in danger of decline. In the case of the fast-moving technology industry, however, decline into irrelevancy has become a nearly instant process.
The problem begins with the iPhone 4S. The iPhone 4S is a fine phone that compares very well to everything else on the market. However, for the first time in the iPhone’s history, it did very little to get people excited about buying an iPhone. It was faster, thinner, etc. than its predecessor, but lacked any compelling features over the iPhone 4, with the exception of Siri.
Siri itself is another excellent example. Let’s face it: Siri is half-baked at best. It’s not a mature product. Moreover, it’s not even as good as the competition from other mobile operating systems.
Now, these are just two examples, but when you consider the unannounced iPad Mini, it appears as though Apple is borrowing from its competitors; 7″ tablets have been Android’s domain with the Kindle Fire, Nexus 7, Nook Color/Tablet, etc., and represent an area Apple has not as of yet expanded in to.
Going deeper than that, iOS itself is showing its age, having remained functionally the same since it shipped on the original iPhone. While Microsoft and Google continue to add new features, iOS remains mostly stagnant.
Earlier this year, Google blew the socks off the tech industry by demonstrating Project Glass, an internal effort to develop an augmented reality head-mounted display. This was a device straight out of science fiction, and Google had working prototypes. It may be years before it becomes a commercial product, but the fact remains that it is utterly unique; there is nothing out there like it.
Microsoft followed up with the Surface tablet. All the power of a PC or laptop in a device the size of an iPad. Not only that, but it would be able to run Windows applications; lest we forget, for as dominant as Apple’s App Store may be it is but a pale shadow compared to amount of software available for Windows devices.
Apple’s response was, shall we say, lackluster. Bump up the screen quality and speed of the iPad, and introduce the iPhone 5 with LTE and a larger screen. Yawn.
However, the iPhone (and its iPod derivatives) and the iPad are not the entirety of Apple’s portfolio. Apple maintains two others: the Apple TV product line, and the Mac computer product line.
The Mac product line is utterly stagnant, and has been for years. Very little in terms of innovation. Even less in terms of increasing market share. Apple, ironically enough, faces the opposite problem in the PC space than it does in the phone space; everything is written for Windows, therefore Apple has a tough time competing.
The Apple TV product line, in my opinion, is Apple’s Waterloo. Apple made the iPod by breaking the music industry with iTunes. However, the music industry was also in decline at the time. They were getting hammered by P2P services and customers were clamoring for new ways to purchase and carry their music.
Apple, thus far, has been utterly unsuccessful in doing the same thing to the television and movie industry, because the TV/Movie industry doesn’t need Apple.
The TV and movie industry profit massively from the current system. They’re uninterested in giving Apple anything more than what they already have, because why should they? What’s their motivation for upsetting the existing paradigm? They create content, they deliver the content, people can view the content. All Apple adds to the process is a potential secondary revenue stream at the expense of their primary revenue stream: the Cable/Satellite companies.
Imagine, if you will, an Apple TV that let you download and watch current episodes of your favorite network and cable TV shows for one dollar a show. HD quality, no commercials, and infinitely rewatchable. Why on Earth would you have a cable subscription then? What about an ala carte model for channels, where you pay two or five dollars a channel and get whatever you want? That’s the future Apple wants, where the media companies produce the media, and have to go through Apple to put it in front of eyeballs.
The media companies, obviously, have a vested interest in ensuring that does not come to pass.
Moreover, the other big Apple rumor is that there’s an Apple HDTV.
Oh brother.
HDTV’s are notoriously low profit-margin devices. Even if, as Steve Jobs claimed shortly before his death, Apple has “cracked it”, does Apple really believe that they’ve created the next Great Leap Forward in terms of HDTVs that will change the way everyone does things? I think not.
It is for these reasons that I’m bearish on Apple’s future. They exist in highly competitive markets and their failure to innovate or strongarm other industries to bend to their whims will catch up with them sooner rather than later. Microsoft, Amazon, Google, and Facebook are at the gates; the question now is whether Apple will fiddle or fight.
