Why Apple doesn't need to innovate much to stay ahead of the competition

Why Apple doesn't need to innovate much to stay ahead of the competition

Summary: The rules that apply to everyone else in the industry don't apply to the Cupertino giant.

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The rules that apply to everyone else in the industry don't apply to the Cupertino giant. But Apple doesn't need to innovate much to stay ahead of the competition.

To begin with, Apple doesn't seem to be having any problems selling iOS devices. They're flying into the hands of consumers as fast as they are coming off the production line. With a whopping 172 million post-PC devices -- iPhones, iPads and iPod touches -- sold up to the end of 2011, and of that 62 million being shipped in the last quarter of 2011 alone, not only is there a huge pre-existing base of people wanting to upgrade their current iOS device to the newer model, new buyers are also climbing aboard the iOS juggernaut every day.

And it's not just consumers that are embracing iOS devices in their millions, the iPhone and iPad are making huge inroads into enterprise markets too.

Then there's the budget iPad 2, Apple's newest iOS gateway drug. It's only available in one storage capacity of 16GB. At $399 -- compared to $499 for the cheapest new iPad -- the price will not only be an enormous temptation for consumers who have been putting off buying a new iPad, but also it will appeal heavily to anyone thinking about buying iPads in volume.

By keeping the iPad 2 on the market, Apple is engaging in psychological warfare with the competition. It's sending the message that at $399 the year-old iPad 2 can still give whatever new product other companies bring into market a run for their money.

Also, by keeping the iPad 2 on sale, Apple is giving those who bought an iPad 2 over the last few months the feeling that the their purchase isn't obsolete. Apple isn't trying to sell the new iPad to those who bought an iPad 2, but instead it's selling to those who either have yet to buy an iPad, or those who bought a first-generation iPad. This is Apple's business model in other areas, so it's not that much of a leap to imagine that the company will do the same with iOS devices.

Another thing that we need to bear in mind is that post-PC devices are rapidly becoming mainstream and we will soon look at them much in the way that we look at PCs now. We don't expect yearly innovation when it comes to PCs, and there will come a day when we won't expect it of post-PC devices either. There will also come a day when Apple updates the iPhone and iPad much in the same way as it does with iMacs and the MacBook range; silently and with little in the way of fanfare.

The final, and most obvious reason why Apple isn't really under much pressure to innovate is the fact that there's little in the way of competition to the iPad, or the iPhone for that matter. Android might be selling more when it comes to volume, but the Android ecosystem is made of up of a whole bunch of disparate OEMs.

Margins are razor-thin as everyone fights it out and races to the bottom in terms of price to try to capture as much of a market share as possible. I don't see a single Android tablet that rumps the new iPad or the iPad 2 at their respective price points.

The tablet has been pretty much stitched up by Apple and I don't even see Microsoft causing much of a disturbance when Windows 8 ARM tablets start making an appearance. In fact, OEMs will have an enormous challenge on their hands to bring a Windows 8-powered tablet to market that can compete against the iPad on price, battery life, screen quality, performance or portability.

Image credit: Apple.

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Topics: Mobile OS, Apple, Emerging Tech, Hardware, iPad, Laptops, Mobility, Tablets

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82 comments
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  • You know what reality is...

    It is both iOS and Android... Both sides don't like the other selling well but they both do and it is the same holy war as Mac vs PC but the winner of the last fight is an aging champion and it has given way to younger challengers.
    slickjim
    • To be honest I don't care if "Android" sells well...

      Over all I think the path they Google choose is to emulate the old champ MS in many ways what with volume sales and such. I'm pretty sure it's not going to work out very well for the OEM's that get caught up in the inevitable price war that is the untold story of MS's success. And in the process like MS Android will suffer because as more and more people see a growing chain of failures via support, lack of quality build, poor support all due to cutbacks in the ever increasing demand to find profit in a world of thin margins and share holder demand to see results from their investments. Basically a repeat of the past. Google might do fine in the short run with this but with Google buying Moto mobility and teaming with what is it Assu to make tablets all Android OEM's have to ask themselves some serious questions and with W8 representing a viable third option other than iOS and or Android OEM's might decide something like this "Well at least MS won't be making their own Phones and or Tablets to compete against us so why not go with them?" And "IF" MS gains some market share with W8 I can see an OEM price war with W8 and Android devices trying to under cut one another to gain market share and or volume. A game i don't think Apple will choose to play. So in the end it's all good:)

      Pagan jim
      James Quinn
      • What a stupid comment

        James, Thank you for making it clear that you have absolutely no idea what you are talking about.
        RememberOctober29
    • Current Reality

      I wouldn't count that battle as over yet. You may eat your words in a few years. I still remember the articles written in 1997 about how Microsoft had overlooked the Internet and was being brought down by Java and Netscape. So far, they're far from beat. May still happen, but hasn't happened yet.
      WebSiteManager
      • And what was their response?

        That's right behavior that had them embroiled in antitrust cases for a decade and payments of tens of billions of dollars.

        Netscape was on the right track, it has taken much longer but watch HTML5 and the browser now dominating the APIs.

        MS has lost the win32 lockin, the source of its monopoly. Competitors are taking advantage.
        Richard Flude
  • Different markets

    Apple has chosen to focus on individual users via their smartphones and tablets, which they do very well. As for business-oriented PC's, not so well. Microsoft used to focus on business-oriented and power-user PCs and did quite well. Now that Microsoft is attempted to move in on where Apple has done quite well, with its mongrel Windows-8 Operating System, things are not going well for MS.
    TsarNikky
    • Changing Dynamic

      It used to be that people bought for their home what they had at work. That's how Microsoft won in both territories. Today, a lot of people - many would be arguing it's the new dynamic - are taking what they bought at home into the workplace (BYOD - bring your own device). This comes at a time when Apple is very strong in consumer. Microsoft is trying to counter that with focus on consumer, both to continue to grow (their market share in) that segment, and to protect their corporate turf.
      Mobile phones are an especially interesting device in that regard: on the one hand, they are important computing devices for people that they use for more and more things. On the other hand, in a time of economic difficulties, many businesses and public sector employers can't stomach handing out mobile phones to their employees, leaving that territory wide open to BYOD and its accompanying sea change.
      WebSiteManager
  • Don't forget...

    The social factor. Apple is still perceived as the hot thing and it is fashionable to own their devices. Also, a lot of people get Apple devices because that's what they hear about or because they have know people owning them.

    For Windows 8, it would very suprising that Apple even has an eye on it. In its current form, it is not even a distant threat. Why bother then?

    Microsoft has an incredible opportunity but it still seems they are not ready to leverage it. Some old-style, attached to the past internal forces are keeping Microsoft from taking the real game changing decisions.
    TheCyberKnight
    • Not a distant threat? I agree.

      Apple looks at it as closer then they would like, so they see it far from distant.

      Remember - Apple mocked Vista, yet didn't say boo when Windows 7 came out. If you think that Apple doesn't consider everything a threat, then you don't know Apple.
      William Farrel
  • Why Apple doesn't need to innovate much to stay ahead of the competition

    They don't need to innovate because they know their loyal fans will continue to buy and upgrade every year no matter the device or price.
    Loverock Davidson-
    • Ironically; as a devoted MS fan boy that's something you know too well.

      But you're right. It's the same reason Microsoft can market a Metro OS that nobody likes or wants much and still push Windows 8 forward into a purely cloud-based model users neither trust MS to embrace ethically or believe that they can provide reliably.
      Socratesfoot
      • By no one you mean you right?

        Why is it when people like you do not like something or want something it is made out to be that no one wants it. But if you do like or want something and somebody else doesn't agree with that then they are a hater.
        bobiroc
      • Lets stay on topic here

        This really isn't about Microsoft, its about Apple.
        Loverock Davidson-
      • @Loverock Davidson

        The topic here is Apple [b]and its competitors.[/b] I believe most people think that Apple's competitors include Microsoft.

        Therefore any discussion, no matter how much you want it to be merely about slamming Apple, should include Microsoft.
        msalzberg
    • Does it mean that there are more Apple fans than MS fans?

      Going by what you say, does it mean that MS has very few fans (judging by its WP7 success)? If so, why? I am a techie who never owned Apple devices for the last 25 years (but do so now) even though ALL my programming is on Windows. Apple has a better user experience compared to Windows. Most young people out there feel Windows development is for middle aged developers and senior managers. Windows is like job security, so many patches every Tuesday or so which messes up something else and you need to check your .NET code to ensure it works properly and so on. Compared to that, the Apple experience is very smooth and slick. Though I am a Windows guy, I feel that Apple will to do Windows what the Japanese car companies did to the American car companies
      GoForTheBest
      • Not sure about that

        But the article is more about Apple than Microsoft so we'll focus on that.
        Loverock Davidson-
  • Innovate or die

    It's assinine to suggest that a company in the tech industry doesn't need to innovate to survive. How many tech giants have been brought down by a competitor over the years?

    Heck, Microsoft has a market cap over $600 billion at one time and I bet that in 1999, no one predicted Apple would be giving them this kind of run for their money 10 years down the road.
    mcksmith
    • Agreed

      But the premise of the article is that Apple doesn't need to innovate *much* rather than not needing to innovate at all. Two years ago they innovated very much with the introduction of the iPad (I still find the name to be laughable). This year they innovated, but did so to a much lesser degree. This benefits Apple tremendously. They can concentrate R&D on a limited number of innovation projects in order to do those projects right the first time, and it gives them a much longer period of time to introduce new versions of products and thus profit from each release over a longer stretch of time.
      use_what_works_4_U
  • Don't forget the massive amount of free marketing.......

    Apple recieves every day. We have a local news channel here that just talks about the ipad about every other segment and post on facebook and they are just one example of many. They push it like its the best thing since sliced bread and no other company gets treatment like that in the market. I would say Apple recieves more free marketing than P&G pays for marketing in a year, which is in the Billions! I am hoping that kind of obnoxious in your face free advertising makes people think twice about supporting such ridiculous shove it down your throat adittude they push on us and go with a different product!
    OhTheHumanity
    • Just like on ZDNet!

      Your local news and ZDNet seem to have something in common.
      Loverock Davidson-