June 13, 2017

Is it over for Apple? It will be tough to remain competitive.

Once upon a time (in 2007), Apple was “the” most exciting company I have ever known.  This was shortly after Steve Jobs re-invented music player and moved past the joke that is the original iTunes Phone (Motorola ROKR E1).  At that time, each WWDC was filled with excitement: The original iPhone (full web browser, html-friendly emails and mobile applications unlocked our mobile possibilities), the first iPad (a tablet for the masses), the creation of MacBook Air (and the display of how it fits inside an inter-office envelope) and even the launch of Apple TV and Apple iPod HiFi.  At the time, Blackberry was just about to peak in terms of sales, literally locking down the remainder of the corporate sales due to stubborn IT people.  Microsoft was just about to crawl into a 10 year rut known as Windows VISTA, Windows 7, Zune and Windows Mobile 5/6 era. It seemed like no one can touch them at the time.

As a fan of technology, I consider myself a little ahead of the average users, and for the past 3 years, I have completely moved on from Apple.  For me, after the passing of Steve Jobs, there hasn’t been any significant innovation, or new products created by Apple that convinces me that I need it.  Its been 3 years of recycling the same amazing legacy setup by Steve Jobs (iPhone, iPad and Macbook).  Its not that Androids or Microsoft have super exciting ideas but little by little companies are starting to draw my attention away from spending my time or money with Apple.  Whats kind of alarming in the past week is that at the Wrap up of WWDC 2017, I am beginning to see institutional investors start to downgrade the untouchable Apple Stock.  It seems like suddenly, people are realizing that Apple hasn’t had any significant innovation on new product genres.  This is kind of sad for me to see but it seems like people might be catching on to the same sentiment?

Its always easy to just say Apple is lacking in innovation and end there, but I wanted to give my personal view on which competitors have been drawing my attention away from Apple.  Don’t get me wrong, its not that Apple hasn’t been pushing its engineers to improve upon excellent products after each iteration, its just that for the most part, I have no need to buy their “improved products” because the improvements do not yield a significant enough innovation or product differentiation to make an upgrade.  So to be clear, I have not been buying new Apple products but I still have a few legacy products that I use.  When these legacy products are no longer good enough, I have been buying replacement products from another their competition.

Steve Jobs’ Legacy Products – Lets start with the products that have been around for some time.
iPhone:  The original iPhone, iPhone 3G, iPhone 4, and 5 are arguably the best smartphone and “the” smartphone that changed the mobile world as we know it.  Steve Jobs had his vision and charm to convince people to stay within his eco-system.  For me, I started to find limitations of that eco-system and I needed more flexibility of Android.  The ability to synchronize music, or add and remove software, files, photos without a computer is what I needed.  iOS eventually got around to that, but still never quite willing to provide the flexibility of Android.  The simplest example would be the lacking of expandable storage.  In fact, Samsung’s new flagship phone Galaxy S8 is now being considered ahead of Apple and the new iPhone 8 is playing the catch up to Samsung.  As for me, I have been part of Google’s Project Fi network which ties me closely to their Android platform.  I switched to Android phones back in 2012 and Project Fi’s flexibility is just icing on the cake.
iPad: I had my doubts about the iPad in the beginning, I thought it was just a larger version of an iPhone.  Because even early on, I felt like it should have more capabilities to replace a laptop but it wasn’t there. However, for a few years, I really enjoyed having an iPad as my travel companion.  Watching movies and surfing the web was a pleasure despite the fact that I still have to bring my laptop along to do real work.  But its been almost 10 years now, its time for iPad to step it up.  I know the iPad Pro is getting close but its still not a laptop replacement.  I finally decided to give Microsoft a shot at their Surface Pro and I just love it. It has the ability to be used as an Tablet but it is a full blown, powerful laptop.  It seems the Windows camp have been stepping up at their customer service game as well because my dealings with their customer care has been top-notch.  Its what I wished iPad should have been and in my opinion, its one of the biggest mis-step for Apple to dumb-down the iPad in the interest to protect its MacBooks.  The lack of needs for me to upgrade plus a slew of options from cheap to expensive on the android side is making it very hard for me to buy.  At this point, I am only buying iPad Minis for the kids and only because it’s the lower cost of its line-up.
Macbook:  (I haven’t bought a desktop machine for a long time so I will limit this paragraph to the laptops).  The Macbook has been a solid workhorse for many people for many years now.  As a PC guy, I have noticed the uptake of Macbooks in corporate environment more than ever.  Lately, I am seeing more and more people requesting the new Windows 10 based Ultra-books.  With touchscreen, powerful intel Core i3/i5/i7 processors and slim design (Dell XPS, Lenovo X1 Carbon, Asus Zenbook) people are finding their way back to Windows camp.  Personally, I remembered “iOS Boot Camp” was the most exciting thing that could happened because I was able to run Windows Vista on a beautiful Macbook Pro, a hardware that was to be desired. At the time of writing, most of my friends are buying up Microsoft Windows 10 based laptops since new Windows ultrabooks have stepped up in design.  Macbooks are still very nice but again, it more or less stayed in the same form factor for the past 10 years.

New Areas that Apple is now playing Catch-up: Apple may be finding itself in an uncomfortable spot in the following categories.  One can argue that they have completely missed the opportunity to present itself as market leader given how much competitors may be ahead and now it is tough to catch up.
Smartphone Home Automation Products:  Apple is sorely missing out on Home Automation products, from thermostats, lightbulbs to door knobs, Apple hasn’t made a move here.  I know they have the Siri Homekit but they are not offering any product to re-inforce their eco-system.  Even simple products like Google’s Chromecast or Amazon Fire-stick which smarten ups the old TV sets is a great way for both of these companies to tie users further into their eco-system.  The closest thing they have got is the integration between Apple TV and iPhone/iTunes within this category.  Apple should begin to invest into companies that may have a good idea in this area if it wants to catch up.
Home Speaker Digital Assistant: Amazon Echo is probably the market leader right now and Google Home is trying to play catch up.  Amazon has been at this game since 2014 while Google launched their arsenal late 2016.  Apple is just starting to talk about the imminent launch of the “HomePod” Speaker at last week’s WWDC. I don’t care what their marketing material is boasting at this point, a scheduled launch in Dec of 2017 and a higher pricing of $349 is going to make catching up to Amazon’s $139 Echo and Google’s $109 Home Speaker very challenging.

Media and Content Generation: NETFLIX, NETFLIX, NETFLIX… this is what everyone is trying to catch up.  The good folks at Netflix re-invented the showbiz and a business model for online cord cutters. Hulu+ has been around for a bit while  Amazon has been dashing to creating content for its subscribers (Prime customers) and Apple is playing catch up once again with Carpool Karaoke and Planet of the Apps.  In this arena, its all about subscribers and users.  I know very little about this space other than Netflix has definitely nailed down the process of generating new original programming and is pretty generous with allowing the entire family to stream.
Self Driving Cars: The world is watching this space closely and it’s all about TESLA.  The one thing TESLA has going for them that no one can compete even Google, Uber, etc. is the charming Elon Musk.  This man has what Steve Jobs has, the ability to impress the world and create products that make people feel they have to have it.  I know Apple has been dabbling with this idea in the past and it seems like recently this self-driving initiative is coming up again.  With powerhouse TESLA grabbing headlines and Google’s initiative dating back to 2009, its going to interesting to see how Apple is going to catch up on this front, especially given that most of the talents are probably settled between TELSA and Google at this point.    

I still have some nostalgic feeling towards Apple.  I think their hardware design is still gorgeous and quality is second to none.  But they have not been able to innovate in the same way that makes me feel like I should continue to buy from them.  With the recent headlines and negative sentiments, I can't help be feel the same way I felt about RIM/Blackberry just before they peaked out.  I think its not too late for Apple to re-invent itself, for the most part, I think it has enough cash to be able to invest its way up towards a new round innovation or stay in relevance.  I just hope there is enough time in this tight race amongst the silicon valley's titans.

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