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How much is Apple responding to the market vs. innovating?

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Apple’s(s aapl) Tuesday event has come and gone with two major new products announced: The iPhone 5S and iPhone 5C. but there’s a difference in Apple’s product line now than from just a few years back though. From where I stand, Apple has been responding more to consumer trends in the market instead of leading product categories with first-to-market devices.

iPad mini: Big experience in a small package Thumbnail

Take the iPad mini, for example. Steve Jobs publicly shared his disdain for small tablets and never said otherwise during his lifetime. Without a doubt the original iPad was a game-changer but the iPad mini? That was Apple’s answer to other small tablets already on the market. Have doubts? My January 2011 post of dumping the larger iPad for a smaller Galaxy Tab was read by Apple executives, who gleaned some great commentary from our readers on the topic of small slates. Clearly, the iPad mini wasn’t a market changer, but a market follower.

Need another example? After ignoring the growing market for large-screen devices, Apple created the iPhone 5 last year with a screen bigger than its predecessors. It’s possible that Apple always had plans to use a larger screen on its phone, but it sure never hinted at the possibility. Instead, the company continued to use the argument that its phones were better for one-handed use than the larger handsets people were interested in.

iphone 5 c red

Now Apple is offering a low-cost iPhone 5C starting at $99 with contract; a completely different sub-product for the iPhone line. In fact, after 6 years, this would be the first such sub-product. Apple’s iPhone sales are still growing, so why the need for an iPhone 5C? Cost. In larger markets — think China and India — Apple’s current iPhone is too expensive so consumers are turning to lower-priced Android devices. Again, Apple has to modify its business model to meet the market.

None of this is a bad thing, nor is it something unique to Apple. All companies must evolve their products and services. And all of these devices are outstanding. I bought both an iPad mini and iPhone 5 and don’t regret the purchases for a second. This isn’t about Apple’s latest products; it’s about Apple doing something that it really didn’t need to until recently: Adjust its mobile product mix to better compete.

And to me, that means Apple doesn’t drive the mobile market as much as it used to. Again, not necessarily a problem, but an observation that’s worth noting because the mobile landscape has definitely changed over the past 6 years and it will continue to change as competition tightens.

You can clearly see that Apple’s not leading as much based on some of the new iPhone 5S features: It has a low-power chip dedicated to reading sensors — just like the Moto X(s goog) — and the camera has larger pixels. Why? Because “bigger pixels are better,” said Cook. He could have just asked an HTC representative to make the statement. The HTC One camera uses fewer pixels but guess what; they’re bigger too.

iPhone touch ID

Having said that, kudos to Apple for advancing its A7 chip, which now is 64-bit capable. That will improve performance and all for more memory in the future, although iOS runs really well on less memory than other platforms do. And I also like Apple’s innovative Touch ID: The new home button that’s also an advanced fingerprint sensor. It will surely help with authentication when buying items from iTunes. And in this hyper-competitive market, you can bet another handset maker will try to recreate the idea for its phones.

But is Apple truly leading innovation in this market like it once did? Not as much as it used to. Regardless, that’s simply a high-level observation as I have little doubt Apple will set sales records with its newest iPhones and iOS 7 software.

39 Responses to “How much is Apple responding to the market vs. innovating?”

  1. What’s missing from this article and all the other ones that cover the new iPhone 5S is a comparison of its fingerprint reader with the Motorola Atrix. I had that phone for 2.5 years and the fingerprint reader was fantastic. In the case of me having dirty or wet fingers or if I had to give the phone to a trusted person, I could resort to PIN. Using it to authenticate purchases on the Play Store would have been relatively trivial.

    That was the last phone, as far as I know, that had a fingerprint scanner before the iPhone 5S. I heard that the reason phones stopped shipping with fingerprint scanners was COGS, Wonder why they’re back.

    I know in this world of gadgets, people tend to have very short-term memories, but I look to people like Kevin for a bit of a historical perspective. How does this compare with the Atrix?

  2. I wonder why people don’t come to grips with the idea that Apple works its iPhone in a 2 year cycle, just like carriers work with their customers with 2 year contracts in most places…I buy the numbered phones every 2 years, (got a 5 last year, will probably get a 6 next year), while my wife gets the #s ones every 2 years (she’s getting a 5s as soon as they get here), and we are both on 2 year contracts with our carrier, and Apple knows that most people who are in 2 year contracts won’t pay to cut them short, so…they lead, every 2 years, there’s no hurry.

  3. There is a lot of “innovation” group-think around these days. This article doesn’t buy in completely but is nonetheless premised on the idea that innovation is always a possibility.

    There are limit cases to technologies. We are just about there, for example, on screen resolution. “Retina” is not just a marketing term. There is little return on investment in higher resolution screens after they exceed the resolution of the human eye. And there are limit case in the interface as well. The mouse was very innovative. But after decades the basic innovation – spatial select and do an a Cartesian plane – remains undisrupted and in all that time the mouse has only been enhanced and reformed (wireless connection, trackpads, kinaesthetic sensors, etc). The form of the innovation – pointing – has not changed.

    Touch (non-stylus) was an innovation. And so to was the introduction of other ‘senses’ like accelerometers. They generated new use cases and possibilities. But you cannot do something as radical as that on a yearly basis.

    After the innovation things stabilise – for a long time. Then it becomes a question of incremental development and enhancement. We see this in a lot of industries. There is a reason so much ‘innovative’ design in the automotive industry is relegated to ‘concept cars’ that never see production…. they don’t generate compelling new use cases for the car. And with very mature design languages like the car, big changes come as a set of transformation increments in response to shifting economics and technology -as in the very incremental move to both zero emission and autonomous vehicles. Hardly a market disruption. And that’s because the relationship between technology and use-cases is stable.

    The mobile phone is now culturally stable. Pretty much all common and rational use cases for a pocket connection point are catered for. Disruption is now subject to diminishing marginal returns. Apple cannot ‘disruptively’ innovate the mobile phone. But it doesn’t matter. No one can. Continual and incremental enhancement is the order of the day now. Even the difference between wearable and carry-able is not that great when viewed as potential for different use-cases. Google Glass may not disrupt the mobile phone that much more than the track-pad disrupted the mouse.

    What no one seems to notice is that while Apple has been a bit of a paragon recently in disruptive innovation, they are also doing a pretty good job of keeping their platform on the develop and enhance curve.

    • Chuck Dotson

      Wow, an actual thoughtful reply!

      It makes me think of Apple’s new MacPro–surely the freshest take on computer design since, what, the early 1970’s? Whether it will be disruptive remains to be seen. My money is on “no,” not because I don’t like it (do want!) but because the landscape for computing has changed so much in the last five years. Plus, the computer seems to be specifically designed for high end applications (content creation, etc.) rather than even premium home use.

      Apple can and does innovate, the question is whether a given product is in a “disrupt-able” state. What would be a disruptive rather than incremental feature for phones at this point? I can’t think of one.

    • Rambling, makes no sense and appears to exist to fill up space is how I would describe your comments here. Like these two gems:

      idon’t Know
      Do you seriously not know that the Nexus 4 is sold at or a little below cost?
      Reply Share

      Idon’t Know
      Tuesday, September 10 2013
      Also do you seriously not know that all the flagship Android phones not sold at cost by Google like the Nexus are as much or more than the iPhone?

  4. Are they doing either? One screen size is not responding to the market. A fingerprint reader is apparently not innovating (per a comment above). This is the third iPhone launch in a row that’s been rather disappointing.

  5. Traditionally Apple bring in the new phone at roughly the same price as the old one and the old one gets a slight price drop.

    This is exactly what’s happened today except Apple decided to save themselves a couple of extra pennies by shucking the aluminium shell in favour of a plastic one.

    This is not a cheaper phone and at Apple’s ridiculous prices it’s certainly not aimed at developing markets.

    The 5C is twice the price of a Nexus 4, but in no way is it twice the phone.

  6. Yet “the market” still consists of products that are iterations of Apple’s iPhone and iPad.

    I guess you could say the Galaxy Gear blazes a trail – through a mudhole, across a cow pasture and into an abyss.

    • I guess you missed the parts about the features that Apple iterated from other phones. ;)

      Look, they may great products — I said that above too — but if you blindly dismiss the efforts of others to make great products, you’re limiting your perspective. Your choice, of course.

      And I’m not a fan of the Galaxy Gear. I don’t think its as bad as you say but it’s a rehash of old smartwatch ideas. I’m still waiting for the true innovation in that space.

    • Idon't Know

      Of course they aren’t.
      The S 4 had manufacturing cut by millions of units and Samsungs stock took a dive because of it. The weird plastic leatherette Note 3 is not on sale yet. read any android forum and see how many android fanboys have dumped the S 4. Lots of them.

  7. Apple is still the top brand in the world. Apple destroyed Nokia and Blackberry. I don’t even like Apple, but they still deserve respect until they do something really stupid. So far they’ve done everything close to perfect.

    Microsoft looks cool with their 41MP camera, but look at their newest phone, it doesn’t have it. No one can yet make that sensor in the volume needed at which Samsung and Apple operate.

    The aluminum case is also hurting Apple. People expect a sweet polished case, but getting it at the volume needed has been difficult. It’s not like Apple chose to use a smaller screen to spite it’s users, that’s the biggest screen size their material supply chain could support.

    • Idon't Know

      Volume was only affected at the beginning of manufacturing not later. I’m laughing at your idea that their supply chain, which every other tech company envies, can’t support a larger screen. Ever heard of the iPad or iPad Mini?

  8. Joel McLaughlin

    64 bit doesn’t necessarily equate more performance. More addressable memory which it COULD need in the future. However, in general it’s not about performance with 64 bits but memory. If your device is constrained by this, then 64 bit will help.

    Arm is ALMOST there with 64 bit and it wouldn’t be a stretch for there to be a 64 bit Android device very quickly.

  9. Well written article. I am an Apple user and I love their products, but I do see why they are starting to bend a little to the wants of the market to stay competitive. I still think Apple makes a great product, but I they do lose people to their prices, especially in this economy. I know so many people who have told me, I would love to buy and Apple product, if they didn’t cost so much. Thanks for the article.

  10. H. Murchison

    Steve Jobs

    “no one wants flashed based MP3 players” – next year the iPod Shuffle came.

    “Video is unnecessary on an iPod” – followed by the iPod Video

    “7” tablets are DOA” – iPad mini came 2 years later.

    It’s not Apple that is reacting to competitors. Product design life cycles dictate that Apple was likely to already be working on the iPad mini as jobs panned the nascent category of small tablets.

    Many like to claim victory but really it’s just company poker. Strategically, Apple isn’t going to show all their cards and the best way to throw people off the scent is to pan a product.

    People overreact regarding innovation. Large technological shifts take 5-6 years (paraphrasing Bruce Tognazzini’s comments on the subject). During this time the competition catches up to the leader ….or so they think they are. Reality is companies like Apple are already looking for the next market to disrupt and have likely initiated the design process.

    Android came to market with the premise that multiple form factors would be possible and in fact they are. However, when you look at Motorola, Samsung and others it’s clear that Apple was correct a long time ago and Android look more like iPhones than iPhones look like Android. All things being considered i’m going to put my money on the trailblazing company to deliver again in the future.

  11. John Gibson

    Apple is now in that era of it’s life as a company where it’s goal is to protect it’s success. They are no longer the scrappy upstart who needs to lead, they just need to protect the flanks and keep the profits rolling in.

    • Buckingham

      @John That’s what most companies mistakingly do, sustain. A very poor, short-term strategy.
      If Apple stops innovating they will become like those that will no longer lead: Dell, Microsoft, HP, thousands of others.
      Apple’s is setup to run differently by design to innovate.

      @Kevin clearly hasn’t looked at Apple’s history, they don’t release innovations on a yearly basis. They improve the few products so they are the best experiences for the user.
      Also, they don’t lead in any technology; so any Apple product compared to a single feature on another product may not seem to be better But it’s the combination of features than make an Apple product a superior experience. So you’re argument is not well founded.

      • Buckignham, I totally understand Apple’s history. They’re good at redefining markets and then incrementally upgrading products to keep that market. I’d also disagree that they don’t lead in any technology: For years they’ve lead in the phone UI/UX space and in cameras on their phones.

        I do agree that the combination of hardware and software is what makes Apple products as good as they are. And they are good products. I just think the market leadership and vision isn’t where it was.