Apple CEO Tim Cook has a tough job. He runs the most valuable company on planet earth. Apple has the most money of any company and more than most countries. He has wealthy shareholders and happy customers to deal with. Yet, most of Apple’s products would fit onto a conference room table.
Apple is saddled with a reputation for disruptive innovation, an ‘it just works’ heritage that strains under the weight of a growing product line, a billion customers, increased competition, and, as always, a chorus of critics.
As is the case with most technology companies, they innovate or die, and Apple has a unique position among tech titans because it designs and builds the whole widget, so to speak– hardware and software. That presents Apple with an innovation problem that only Apple can solve.
Sidebar – Google Trouble: former Googler Steve Yegge complains the company has become competitor focused and cannot innovate. The proof of such an accusation is in the taste of the pudding. No, not the taste of money, but the taste of successful new products.
Google has become 100% competitor-focused rather than customer focused. They’ve made a weak attempt to pivot from this, with their new internal slogan ‘Focus on the user and all else will follow.’ But unfortunately it’s just lip service.
In other words, Google’s famed engineers are worried more about what competitors are doing than satisfying the customer. Do you see the problem? Google doesn’t have many customers. Google has a massive number of users. They’re not the same. Despite spending tens of billions of dollars to acquire diversification, Google remains what it has always been. A highly profitable advertising company; technology notwithstanding.
Now, allow me to compare Google’s predicament with Apple.
Apple designs, builds (or, has someone else build), and sells products; mostly hardware, some services, but all the revenue streams either, 1) come from hardware sales, or, 2) are dependent upon hardware sales.
That means Apple’s major problem– other than placating politicians and shareholders– is to build new products to replace old products and make sure they all work well together. We can quibble over exceptions, but Apple is about as diversified as a giant technology company can be, despite so much revenue, profit, and mindshare coming from the iPhone decade.
Think about how Apple has changed just since before the turn of the century.
Apple Stores were mocked as a major blunder but they became a way to showcase the benefits of owning a Mac. Then along came iPod and iTunes and Apple Stores became more valuable and the Mac had an accessory that everybody wanted and bought. After that, it was the post-PC mobile device era with iPhone and iPad, both larger businesses than the Mac, but all grew and became massively successful.
Disruptive innovation continued as the retail stores grew in number, the Mac became mainstream, iPhone became iconic, everybody owns an iPad, and the add-on line became profitable, too– Watch, Apple TV, Beats headphones, AirPods. With one exception Apple has solved the problem of diversification that haunts Google, Microsoft, Facebook, and other companies, especially those who missed the mobile device revolution.
Apple’s new HomePod may be a few years behind Amazon’s Echo in sales and mindshare but Apple doesn’t care. If only 1-percent of the company’s customer base buys a HomePod in the next five years, Apple will have sold about 100-million of their premium talking speakers. Too many? How about one half of one percent of the customer base.
The math is in Apple’s favor.
What’s the exception?
So far, Apple has not replicated the iPhone’s massive decade long run of success; not in revenue, profits, or mindshare. For all intents and purposes, Apple is the iPhone company, even though every other product leads their respective industry segment in revenue, profits, mindshare, or all. What’s Apple’s fastest growing new profit center? Services. And, yes, Services is wholly dependent upon hardware sales.
What we haven’t seen from Apple is the next great thing. The Apple II created the personal computer industry. The Mac moved it toward the 21st century. The iPhone gave Apple massive riches. What’s next? Apple Pay? Apple Music? Apple Watch? None of those have the influence of iPhone. One can argue that Google is a one trick pony operation completely dependent upon advertising; a company that mostly has failed at diversification, but Apple’s problem remains.
What’s next after iPhone?