The Hidden Problem Reflected in Apple Inc.s New iPhone and iPad

By Markets Fool.com

Image source: Apple

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It's hard to question the most valuable company in the world's product vision, but I'm going to do just that.

Perhaps the most widely discussed tech event this month was Apple's March 21 product presentation, at which the tech giant debuted a number of product changes, most notably its new 4-inch iPhone SE and updated iPad Pro.

In a technical sense, Apple's latest devices are certainly impressive, and both its new iPhone and iPad will almost assuredly help Apple sell more devices. However, in connecting Apple's most recent product launch with its overall product roadmap in recent years, I find myself wondering about something that, if true, could spell trouble for Apple and its investors: Has Apple's product development lost its revolutionary touch?

Still thinking different?
Let's kick-start this discussion with a question: What was the last product Apple produced that, in your view, was an appreciable leap forward in its category?

Image source: Apple

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Apple is a company whose brand identity, for better or worse, is built upon revolution, not evolution. However, since the iPad's launch in 2010, there's a legitimate case to be made that no new Apple product has been meaningfully different from its predecessors. Even the Apple Watch -- though I remain quite bullish on its long-term potential -- is in many ways simply a wrist-sized iPod Touch. To be sure, each successive iPhone, iPad, and Mac upgrade ushers in incremental improvements across software, hardware, and design. To be clear, the overall direction is positive, and consistently so. However, they pace seems frustratingly incremental for a company that has wowed the world with such frequency.

Moreover, which of Apple's recent major product updates wasn't in part shaped by the industry, as opposed to Apple's historically independent approach to product design? The screen size increase for the iPhone 6 was pretty clearly influenced by the success of larger Android devices from Samsung, HTC, and others. The larger screen size and addition of a stylus in the iPad Pro last year appeared in part motivated by Microsoft's Surface Pro. Correct me if I'm wrong, but Apple at its best didn't react to the product machinations of competitors, which has me partially concerned.

A more nuanced take
Though one can't simply compare the past to the present, I find myself continuing to contrast Apple's recent product moves to the old story about Steve Jobs' product overhaul when he returned to Apple in the 1997. Here's Jobs talking about the renewed simplicity and focus that led to Apple's eventual string of product hits.


Source: JackIsBack 15 via YouTube.

Apple's product portfolio remains far less complicated than the convoluted jumble Jobs described in the video. However, in recent years, the trend in Apple products' evolution has been one of broadening its offerings within each of its current platforms. This isn't necessarily a negative either. In fact, from a financial perspective, Apple's increasingly diverse suite of products is simply good business.

Apple opened the iPhone section of its March event by providing a critical piece of context. In the past year, the company sold 30 million of its 4-inch iPhones. What's more, these smaller models play particularly well among first-time iPhone buyers, particularly in key emerging markets like China. This could well reflect Apple's long-standing tendency to discount its older handsets. Last year, with its move to larger-screened flagship models, Apple's cheapest iPhones were also its smallest. Now, with updated hardware in a smaller device at a $399 starting price, it seems the new iPhone SE could become a powerful tool to draw ever-greater numbers of users into Apple's ecosystem.

More broadly, this shift speaks to the unprecedented growth challenges Apple must navigate. More so than at any time in its past, Apple must notch massive wins to deliver incremental growth to its shareholders. Last year, Apple produced roughly $234 billion in sales. To grow its sales just 10% in 2016, Apple will need to drive $23.4 billion in fresh sales. However, just 10 years ago, Apple produced $24 billion in total annual sales. Such is Apple's current scope that maintaining even moderate growth requires once unimaginable success year-in and year-out. Seen through this lens, Apple's diversifying its product portfolio to tap into various pockets of opportunity seems an understandable tactic.

What's more, with potentially revolutionary products like its Project Titan automotive initiative or its HomeKit smart-home hub -- an area I feel Apple could be well-positioned to dominate -- the firm clearly has its eyes trained on shaping the future with potentially revolutionary products. Given its longtime penchant for secrecy, Apple doesn't prioritize broadcasting these efforts.

In the end, I'm more interested here in opening the conversation than in making a strong argument one way or another on this subject. However, as someone who has followed the goings-on at the company daily for the more than five years, this subtle, Cook-era shift has come into sharper focus in recent years. Would the company have followed a similar course under the legendary Jobs? That's anyone's guess. However, though Apple's March product event was without question more derivative than watershed, it also spoke to the increased complexity that comes with being one of the world's largest companies.

The article The Hidden Problem Reflected in Apple Inc.s New iPhone and iPad originally appeared on Fool.com.

Andrew Tonner owns shares of Apple. The Motley Fool owns shares of and recommends Apple. The Motley Fool owns shares of Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.