With quarterly earnings released and Apple beating market expectations, there is no denying the financial success it provides for investors. Perhaps the biggest coup that Apple can point to is its innate ability to indoctrinate consumers into an ecosystem of Apple’s design that keeps them buying into the refresh cycle year after year, product category after product category. No one denies that Apple makes high quality products. Its phones and tablets are extremely popular for a reason and though it may benefit from a closed environment that can make it difficult to migrate elsewhere, the basis of that following started with forward looking and advanced hardware.
Today however, the Apple that sells phones, tablets, notebooks, desktop PCs, software, and services often times takes a back seat to competitors when it comes to hardware integration. When a company has the market share and audience of this scope it can be difficult to make sweeping changes in as it risks alienating a subset of consumers. The side effect is a product line that is further behind competing solutions than ever before.
The Mac Pro is the most obvious example of this trend. What used to be one of the hallmarks of the company and was often revered as a pinnacle of the workstation market in both design and performance, through the late 2000s and early 2010s, was updated on 2-3 year cycles and those changes were minimal at best. Late in 2013 Apple released the 2nd generation Mac Pro in its cylindrical form to wide praise for its design and innovation. It did pack a lot of performance in a small space, but updates since release have been, well, non-existent. As a result, the Mac Pro is based on Intel processors that are nearly four years old and an AMD graphics solution that was launched in January of 2012. Silicon advances from the likes of Intel, AMD, and NVIDIA have moved forward tremendously in terms of performance and efficiency, making the Mac Pro the most glaring example of a stalled development cycle.
Even the MacBook, which is often promoted as one the best notebooks available for consumers, suffers from marginal technology stalls. The update cycles have recently been well behind that of their Windows-based counterparts. When Dell, ASUS, Lenovo, and the rest of the ecosystem integrated Intel Kaby Lake processors with improved performance and lower power consumption in November of 2016, it took until June 2017 for Apple to utilize the same hardware. Apple’s inclusion of the TouchBar is another example of the company’s inability to understand the consumer and how they use hardware: it adds cost, lowers battery life, and makes standard tasks like adjusting screen brightness overly complex.
I’m hesitant to even broach the subject of the Mac Mini, Apple’s entry level PC that has last had a hardware refresh over a 1000 days ago. It is based on Intel dual-core Haswell architecture processors that were released in mid-2014, a slight regression from the previous hardware configuration in 2012 that included a true quad-core design.
In the mobile space Apple is the clear market leader but slow adoption and evolution of technology is visible even here. The iPhone was slow to adapt to the market desire for larger screens, waiting years after the range of larger Android-based phones were making waves, such as the Galaxy Note series from Samsung. This trend extends into screen resolutions (Apple still falls behind today), screen technologies (competing phones integrated AMOLED as early as 2010), and screen bezel optimization (a flagship feature of the Samsung Galaxy series). The iOS operating system also lags behind Android in key areas of multi-tasking, support for consumer-friendly widgets, customization of the device, and its closed architecture makes third-party integration a hassle. Apple only added official water resistance support to the iPhone 7 while competitors like Samsung have integrated protection from elements to high-end smartphones for several generations.
Another area that the iPhone market should be concerned over is the current legal battle between Apple and Qualcomm. Despite the business model debate that is playing out with lawyers and press releases, Qualcomm has the highest performing and most advanced modem technology in the industry, offering features like Gigabit LTE well before competing solutions. Undervalued by consumers the majority of the time, connectivity effects the performance of nearly all aspects of a mobile device as well as power consumption and battery life. If Apple were to discontinue its use of Qualcomm modems it would create another area in which the competing mobile markets could extend its technological differentiation. As an added step of complexity, if this partnership would split you can be assured of long term litigation surrounding Apple’s development or use of competing modems.
Apple CEO Tim Cook stirred up controversy by extending the impact of Apple’s AI development past autonomous driving, but many consumers would ask the company to focus on perfecting its Siri personal assistant services first. Siri continues to be the least advanced of the major AI technologies that include Google Now and Amazon Alexa even though it is the most used due to install base. Reviewers and analysts that frequently compare these services still feel that Apple is a big step behind Google and Amazon.
The continuing issues of availability on a product like Apple AirPods and rumors around the iPhone 8 delays point to other concerns the company may have keeping up with competitors.
Apple is clearly one of the most important technology companies of our lifetime but the last 5+ years have shown us that it cannot or does not want to remain on the bleeding edge of technological innovation or integration. There is risk to both paths. The early adopter of a new technology bears the cost of development and the gamble that it may not be a hit with consumers after a significant investment. On the other hand, constantly being behind the curve of technology risks alienating the influencers and early adopters that build brands.