Wowie: Has Apple chewed up its creativity?
Tech experts ponder what's happened to its creativity since it smashed the $1-trillion ceiling
When it became the first company in history to exceed a valuation of $1-trillion last month, Apple’s chief executive refused to get carried away. In a memo to staff, Tim Cook offered a hard-headed appraisal of the tech titan’s stellar stock-market performance.
“While we have much to be proud of in this achievement, it’s not the most important measure of our success,” he wrote.
“Financial returns are simply the result of Apple's innovation.”
But while the success of blockbuster products such as the iPhone and iPad have helped Apple defeat competition from Amazon, Alphabet and Microsoft to the $1-trillion level, industry experts say these days the Silicon Valley giant is facing a growing innovation quandary.
When it unveils three new iPhones at an event on September 12 in Cupertino, California, it will be seeking to showcase its most advanced technological wizardry yet. But not everyone is convinced that the iPhone XS and the iPhone 9 – as they are expected to be called – will be showstoppers.
Leaks suggest Apple has shunned dramatic new design changes since the launch of the iPhone X last year. So has Apple’s financial success come at the cost of creativity? And how can the company maintain its growth or increase market share without the launch of killer new products?
Apple’s trillion-dollar milestone means the tech titan could be in line for a lengthy hangover, according to a prediction from Bloomberg. Investors expect the tech giant’s shares to grow by just 3% in the next year.
Nor is Apple immune to market forces. If the smartphone industry undergoes a natural contraction Apple will suffer, said Ben Stanton, senior analyst at Canalys. “We have already seen this happen in the PC and tablet markets.”
Apple’s grip on the market is already weakening. Only last month, Chinese smartphone manufacturer Huawei overtook Apple as the world’s second-largest smartphone retailer.
Huawei shipped about 54.2 million smartphones in the second quarter, analysts estimated, a 40% jump on the previous year. Meanwhile, Apple shipped 41.3 million phones, up only 0.7% on the previous year.
Apple is so big that it may not see other competitors coming, said Daniel Newman, an analyst and entrepreneur.
“The company that is disrupted doesn't see itself as being vulnerable. Xerox, Kodak, Blockbuster video, Blackberry... By the time they saw it, it was too late,” Newman added.
However, he doesn’t think Apple is heading for a dramatic fall from grace.
“I don’t see it as Blackberry now; I think there is consistent growth.”
However, Apple has long had something that other companies lack: a cult-like following among consumers that has helped preserve the brand’s potency. “Apple is loved by millions of customers,” said Newman. “The press is very generous towards Apple regardless of what it does.”
The pull Apple retains over its loyal fans has for years been enough to deflect criticism over a lack of recent innovation and accusations the brand increasingly lacks personality. However, a new generation of tech-loving teenagers doesn’t share that brand loyalty. Younger, price-sensitive consumers could yet shake things up by demanding Apple deliver new and better products, say experts.
“As a millennial myself I think we have an affinity towards Apple – we remember Steve Jobs and Apple disrupting the market. Teens don’t have that memory,” Newman said. “Apple has the affinity of the most affluent buyers right now. If they don’t innovate ... it will be problematic.”
In the absence of a major new product, Apple’s services are being used to attract new users. Apple has created a “stickiness” to its products and online services like iCloud or Apple Music, according to Gartner research vice-president Annette Zimmermann. She claimed this has worked well to increase revenue.
The product problem
The danger for Apple is that a lack of hardware innovation might damage its services business, Stanton said. Apple has also encountered problems with its current range. Defects in its line of Apple Watch devices, set to be updated in September with the Apple Watch Series 4, have led to screens cracking and bursting. As well as innovation, Apple has to keep its current products in shape to maintain consumer trust.
A lack of hardware innovation could have a knock-on impact on the services business. It would mean users would stop buying Apple products and leave in large numbers.
But that won’t happen soon, Zimmermann said. “On the contrary, Apple has managed a price increase of its flagship product very well (iPhone X) – it is their bestselling product.”
Apple is refining and improving products, but it’s not obvious what could ever replace the iPhone. It would have to do something pretty big, Newman said. “The question is what is that [product]? Apple may have the least motivation of all of the companies because of its financial success and its community.”
– © The Daily Telegraph