Apple

Innovation vs. market reality: Apple's balancing act

Mary Shacklett addresses what some commentators have said about Apple losing its leading edge.

It was joyful, spirited and unabashedly committed to relentless innovation. Dollars flowed in with such velocity that managers scratched their heads, looking for new innovations to fund. Competition for qualified scientists and technicians ran so high between companies that the inside joke was that anyone still onboard with the same company for two years should receive a gold watch.

This was the aerospace industry in Los Angeles in the 1980s. An old IT buddy who was there then, reminisced with me the other day. "Absolutely no idea was too far-fetched to be considered," he recounted, "Then one day, a large automotive company bought us and instantly, internal meetings turned from innovation to cost containment....It was like a curtain had fallen."

Fast forward to Apple, which has been singled out recently by several industry pundits as an innovative company which, under new leadership, appears to be lapsing into an organization that now shortcuts on innovation and instead focuses more on market share and revenues.

Apple enlarged the 3.5 inch screen on its iPhone 4S to more of an "Android-equivalent"-sized screen on iPhone5. Now there are rumors that it is working on a lower cost, tinier "mini-iPhone" that more favorably positions Apple against "multi-tier smart phone" providers like Samsung.

Should Apple be worried about Samsung?

Strategy Analytics' Executive Director Neil Mawston expects Samsung to grab a 33 percent share of 2013's smart phone market, compared to Apple's 21 percent. He also expects Samsung to increase its market share against Apple in 2013 because of its multi-tier product portfolio. Add to this the fact that Samsung's Galaxy S II was the largest "seller" during the holiday season -- not iPhone5.

If you are sitting in Apple CEO Tim Cook's chair, it is impossible to solely focus on innovation when there are perceived gaps in your product offerings, and the market is clamoring for those gap fillers. Arguably, the iPhone5 larger screen was a "catchup" to Android and the new iPhone mini-phone proposal (if it comes to pass) will be an answer to a low-end segment of the market that Apple presently can't compete for. Shareholders and industry analysts notice these shortfalls and expect you to address them.

Then there was the mapping app debacle that plagued iPhone5  -- a quality issue that many felt would have been unheard of during Steve Jobs' tenure, given Jobs' uncompromising attention to quality. In fact, it is precisely quality and excellence of design-the knowledge that an iPhone user will always have the same experience with his iPhone because the processes he performs are fully repeatable and execute without flaw every time-that has played a major role in securing high usability marks for iPhone. The iPhone5 mapping app failure forced some reorganization within Apple and if I'm Tim Cook, I'm wanting to feel secure and locked in with my R&D team, because this is the group that makes the company click. "Feeling comfortable" with R&D was less of an issue for Steve Jobs, because in many respects, Jobs was Apple R&D.

So what to do now?

Apple recognizes (as it always has) that it is in a commodity market. Many companies now offer excellent smart phone products, and they will continue to vigorously compete as long as there is a healthy market (and there is one). In this space, if there are gaps in your product line, you have to fill them-even if you are not first to market with them. When you operate in a commodity market, it is a bit like fashion. Last year's color might have been green but this year's is pink. Somehow, you have to come out as a winner in that sea of green or pink-and the way that Apple has always done this is through innovation.

Meanwhile, there will always be Apple iPhone5 supporters and detractors.

It is Tim Cook's job to address this market-but also to man the helm of innovation that will keep Apple in the "pink."

About

Mary E. Shacklett is president of Transworld Data, a technology research and market development firm. Prior to founding the company, Mary was Senior Vice President of Marketing and Technology at TCCU, Inc., a financial services firm; Vice President o...

3 comments
techrepublic.com.com
techrepublic.com.com

Your article states that the top selling phone this last holiday season was the Galaxy SII. That's not correct. It was the top selling phone for the holiday season in ::2011::, but not 2012. It's possible that the top selling phone for Q4 2012 was the SIII, but I dont think all of the manufacturers have released their Q4 2012 numbers yet.

ed
ed

@ITassasin Regrettably, this article focused on some of the same issues facing a number of other industries--lack of innovation and failure to meet the expectations of potential customers. American auto industry? Eastman Kodak? The industry that's on top had better work to stay there because the next one down will be trying to unseat you.

ITassasin
ITassasin

This article was full... of nothing. Reminds me of eating alot of popcorn.

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