Apple's race to 2014: Six big unknowns

Apple's race to 2014: Six big unknowns

Summary: Perhaps Apple dazzles the tech world with new products and something we don't expect. It's just as likely that Apple is wrestling with gravity and scale like many large tech vendors.


As Apple rounds out the summer and heads into the calendar fourth quarter with what is supposed to be a slate of new products, the unanswered questions are beginning to pile up. At stake is CEO Tim Cook's ultimate grade as Apple's leader and the company's history for breakthrough product categories.

Perhaps Apple dazzles the tech world with new products and something we don't expect. It's just as likely that Apple is wrestling with gravity and scale like many large tech vendors.

Among the key questions:

Will iOS 7 be Apple's Windows 8? Apple's iOS was getting tired looking and needed a refresh. Be careful what you ask for. Apple's mobile operating system was tired, but also just worked well. With the launch of iOS 7, Apple will offer a facelift that the installed base may not love. Keep in mind that Apple's mobile installed base is huge now so it's likely to face the same issues as Microsoft. Move a menu and catch hell. Tweak a map and get the same. Perhaps iOS 7 won't get in the way of customers. If Apple pulls off a perfect refresh though it may be a minor miracle even if many changes are just cosmetic.

Can Apple weather smartphone fatigue and commoditization? All smartphones are starting to look alike. Folks aren't running to break contracts to get the latest and greatest devices. Apple is selling a lot of iPhones, but margins are going to fall in emerging markets as the company goes for market share. A low cost iPhone due in the fall won't help pricing much either. It's tough to be the top dog and it's unclear whether the iPhone will simply become tired with price as a key differentiator. Apple is in a better position than the Android hardware army, but investors used to the company defying gravity may not care.

To drive home the smartphone commoditization theme, Jefferies analyst Peter Misek noted that the iPhone 5 was on the front page of a circular from Real, a low-end supermarket in Germany. Discounted pork and the iPhone shared top billing. Here's the image via Misek.



Will the iPad refresh offset the cheap Android tablet movement? In Apple's most recent quarter, iPad revenue fell 27 percent from a year ago. Average selling prices for the iPad and units were below Deutsche Bank estimates. In addition, the iPad mini is cannibalizing its larger sibling. The larger question regarding the iPad is this: Is there anyone left in developed markets like the U.S. who doesn't have one? Also: Tech spec showdown: the new Nexus 7 vs. iPad mini | Apple looking to supersize the iPad with 13-inch model?


What's the next category? A month doesn't go by where we don't hear some rumor of the iWatch or an iTV. To date, CEO Tim Cook and the gang have little to talk about. As a result, 2013 so far has been a largely Apple news free affair. Cook's legacy may largely ride on whether Apple can deliver another groundbreaking category. Apple reinvented music with the iPod, phones with the iPhone and ushered in the post-PC era with the iPad. Do companies really go 4-for-4 with great products?

Will Apple tame China? Apple's China revenue in its most recent quarter fell 14 percent from a year ago. Apple has had PR problems in China and faces brutal price competition. Meanwhile, the China market---not to mention the government---may just decide Apple makes enough money in that country. Apple has a lot of growth and turbulence ahead in China.

How can Apple leverage its installed base to garner subscription revenue? Apple could turn its wealth of customer data into an e-wallet. Better cloud execution and services could garner subscriptions. There are a lot of incremental things on the cloud front for Apple to tackle. Apple could also charge for these services too since a transaction is just one button away.

Related: Apple Q3 earnings: beats on profit, revenue; sales mixed

Topics: Apple, iOS, iPhone, iPad, Mobility, Smartphones, Tablets

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  • Some of those flattened icons really don't do it for me

    Safari's particularly bugs me. The Jony Ive Redesigns thing blog kind of nails for me how I feel about it... as though throwing Helvetica Neue Lite, pastel gradients, and crayon drawing icons at everything somehow improves it.

    I saw the dev conference, and I really like the floating effect... I keep hoping that will make the flat thing work out. We'll have to see.
    • Almost a Trillion Dollar Dud

      Didn't MS take a $900 Billion write-off because of the surface?
      • Sorry, only a billion dollar dud

        The write-down was only $900 Million.
      • Too many zeros in your number...

        it was $900 million. Amazing what something that by itself is worthless (a zero) but placed behind something else makes a big difference.
        The other thing...what does Microsoft's write off have to do with Apple? Are you saying that we may see Apple write off excesses in inventory?
      • Kudos Ken

        You managed to bring up the Surface in the 2nd post in response to the 1st post that didn't mention anything Microsoft at all.

        Further proof that apple and its fanboys are terrified.
      • Was that to try and deflect his mild critism of one thing?

        Throw MS into the story? But i really wanted to comment on something else in your post

        A 900 billion dollar write off?

        Seriousl , step back and think about that for a second. a Trillion dollars? You really don't know or understand business.

        1) I doubt they had a 900 billion tied up in parts, labor, product, and ads.

        2) MS is worth 265 billion. They would be bankrupt if they had to write off 3 times their market cap, instead of seeing the small drop in stock price at the announcement.

        Even Apple with their 395 billion market cap would have investors and corporate executives jumping off of very tall buildings if they had to write off 900 billion.

        Nice try, but it didn't work.
        William Farrel
      • What a write off is...

        This is a write down on projected profit, not necessarily a loss (although it might be, esp considering R&D).

        But also remember that anything learned via the R&D can be reused. AMD is positioned to start producing x64 bit ARMs chips for power sipping servers, which MS could just port over a light weight Server 2012 to.
        Rann Xeroxx
    • Same here

      Ugh - is iOS 7 trying to be as ugly as Metro? Despite being ugly, Metro is actually more functional on a handheld device. It communicates more information at a glance. This "updated look" for iOS 7 was a pointless waste of resources. They changed the icons. Seriously? That's an update? The new icons actually look worse, in my opinion. If they wanted to make a visual change, they should have incorporated "skins" or "themes," so that individuals could choose how they want their icons and user interface to look. There is nothing functionally different in these new icons. They're just drawn differently. Give us a useful change Apple. Increase functionality. Don't just redraw icons.

      It's becoming more and more obvious that Apple is losing their grasp of what customers want. Did their UI design leader have a stroke or something? They originally had a decent grasp of what people wanted in a phone interface, but it hasn't evolved with the market. Lately, they just seem like they're trying random tweaks and crossing their fingers.

      If the hot-looking HTC One had a camera as good as the Lumia 1020, I'd seriously be considering jumping off the iOS ship. Granted, I'm pretty hooked on Apple's iCloud many-device automatic syncing, and I have a large collection of add-on devices like Bose speaker docks, automobile docks, etc. Plus, I'm not really a fan of Google services, but even I have to admit Android has gained some amazing functionality over the past couple of years, while reducing the dreadful fragmentation somewhat. I'm just about to the point of considering an Android phone.

      If there were more legitimate hardware choices, I'd possibly even consider a Windows phone, despite the ugly blocky interface. Unfortunately, Nokia Lumias have historically been notorious for short battery life, so I just can't fathom buying one. I'm spoiled by all day battery life and never needing to find an electrical outlet for an emergency charge before the day is over. That 1020 camera is really appealing, though. The 41 megapixels are pointless overkill which will eat available storage far too quickly, but I've seen that the shadow detail in the photos is better than any other camera phone. The low light performance is also pretty darn good. The quantity of pixels has little to do with picture quality. Anything above 12 megapixel is pointless for anything other than full-color magazine publications or huge art prints. The optics and performance affect picture quality far more than adding more pixels. The most exciting thing about the 1020 camera is that they improved the quality of the optics and the performance. I actually would have preferred that they stayed around 12 megapixels and improve the optics even further.

      Basically, I'm content with my iPhone (for now) because my perfect phone doesn't exist yet. I'm seeing elements of it spread between several phones out there, so I'm hopeful I'll see the complete package soon. When it all appears in one phone, I'm figuring it will most likely be Android based, because that's where most of the innovation is happening these days (1020 camera aside.) Apple rested on their laurels for far too long. They're in danger of losing a lot of their users if they don't do some major upgrades quickly. Simply changing the icons is not innovation. Give us usability improvements and better tech.
      • I haven't used it, but

        A coworker who has consistently avoided apple is strongly considering getting an iPhone based on the new iOS (testing it on a borrowed device). It doesn't look great to me, but its not awful either.
      • But...

        At least you have used, in no small way, Metro as a point of reference, and then admitted it was 'before' Apple. The 12 stages away from Apple is not an easy road. Kudos for beginning your journey. AA (Apple Anonymous) would be proud of your progress.
      • It looks better on the device

        Those were my first thoughts on the new design when seen on the presentation and on web pages. However, it has nothing to do with what is on the device. I believe, yet another of Apple's tricks (underpromise and overdeliver).

        Havent seen the latest beta, but those before it looked just nice... The usual test: have someone use iOS 7 for a while and then revert them back to iOS 6 results in: "I want my phone back!!! What is this thing?"
        • I've installed it on my iPhone4

          Staying with 6.1.4 on iPhone5. It took me a month to understand I want iOS 7 on my iPhone5. :-) 7-th iOS is more convenient, focused on the productivity. though some of its icons are... well, they look strange. Especially, Safari and Settings apps icons.
          One of my colleagues installed new iOS on his iPhone 5 ,so I saw that the 7-th iOS fits great for iPhone 5. And I was really impressed of Siri performance and improvements. One more week and I'll see how it 'sits' on my iPhone. :-) If Apple won't provide some new icons, we'll provide some. ;-)
          Maria Davidenko
      • I need to tell you something about the 41 MP camera

        The whole point of a 41 MP camera is not to take pictures in full resolution. If you read the reviews, you can see that you can take pictures on a lower resolution and the bigger size of the sensor helps in enhancing the quality of the image. That is what you call 'oversampling'.
  • only one unknown

    Apple's one and only bread and butter is iPhone...iPad will soon be destroyed by Surface RT and cheap android tablets... So the only question is will iPhone survive until 2015 and need to be saved by Microsoft again!!!
    • Whatever happens to the iPad

      It is clear that the little-sold Surface RT will play no role in that outcome.
      • Surface RT and Pro are totally different beasts

        I agree with that, we got some RT tablets and returned them as they were limited and could not do much in the way of creation (kinda like the iPad). We then purchased a Surface Pro and loved it so much we got more of them. The two Surface tablets are totally different beasts, the pro is a true computer in tablet form. We have budgeted for more Win 8 tablets for next year. We are also looking at the Lenovo offerings.
        • Why pay the "Microsoft Tax"?

          When you can buy a Lenovo, or dell for 1/2, or 1/3 the price. When a 10" dell tablet cost $300, why pay a other $500 to $700 just for the "Microsoft" name?
          Troll Hunter J
          • It works out great for Apple

            I can't believe the buying public that is willing to pay so much in Apple taxes.
            Timothy Cook
          • Apple is a premium brand in the consumer market

            Microsoft is seen as more of a utility brand, except for XBox. There's nothing wrong with that, except it makes it harder to charge premium prices.
          • Are you sure about this?

            Clearly Windows is seen as a premium brand since it is the most expensive.

            And it outsells osx 10:1.