Editorial: Anticipating WWDC 2013 under a cloud of Apple doubt

Posted:
in iPhone edited January 2014
Has Apple lost its magic? It's kind of remarkable that pundits and analysts of all stripes are suggesting as much at this point, but really not all that surprising because they've been saying that every spring right up to Apple's Worldwide Developer Conference for years.

WWDC 2013 banners


In a report by the Wall Street Journal "MarketWatch" blog, Dan Gallagher recently wrote, "considerable doubt has crept into the investment community about the company?s ability to live up to its past record of product innovation."

And so, in 2013, three years after iPad began turning the PC market upside-down, six years after the iPhone transformed the mobile industry and more than a decade after iPod redefined media playback, the "investment community" is concerned that Apple has not only lost its momentum, but has no real vision for extending it either. Ye of little faith.

End of a lucky streak?

Apple has certainly been lucky over the past decade. Had it faced more focused, responsive competition from Microsoft in the first half of the decade, the fledgling Mac OS X might not have gotten the exposure it needed to survive and the iPod might never have gotten big enough to be the success that helped fund the company's future developments.

And had Palm, BlackBerry, Windows Mobile and Nokia's Symbian not all degenerated into terrible products people had no love for just at the moment Apple was ready to release iPhone, the company's major success in entering the mobile market might never have happened.

And had Microsoft and its Tablet PC partners, led by Samsung, Dell and HP, not all collectively failed so miserably to capture the attention of consumers and professionals in the enterprise, it would be easy to imagine a world where Apple's iPad never had a chance to shine.

But of course, Apple's success hasn't been entirely the product of other companies' failures. If that were the case, a lot of other firms' attempts to create new products would have automatically been successful and Apple wouldn't be alone in collecting three quarters of the revenue of nearly every major industry it has entered.


Smartphone industry profits


Source: Asymco


Over the past decade, Apple has built a tech empire that rivals the scope and influence of Microsoft in the 1990s, differentiated primarily in that Apple's products are being sold openly next to the competition; Microsoft helped ensure that there simply wasn't any competition. And this factor seems to be a key reason why the media, pundits and investment community analysts have such a hard time understanding why Apple is still in business.

A long winter of discontent

Every year, Apple has had a "quiet period" in the spring, sandwiched between the previous year's blockbuster holiday season and the new releases of the following summer. And every year, competitors have jumped to make the most of this in an attempt to portray Apple as stagnant and mired in the past. Every year they've been wrong.

Looking back just five years to 2009, the tech media was enraptured with Palm's new webOS. Glassy eyed pundits were predicting great things for the new platform and the Palm Pre's new hardware, contrasting iOS and last year's iPhone 3G as being washed up and old fashioned in comparison. It wasn't until WWDC, and the new iPhone 3GS, that Palm lost its spotlight and virtually collapsed overnight.

2010 was slightly different because Apple actually released its new iPad at the beginning of the year. But while the tech media remained suspicious about its potential, they fawned over the "multicore" future offerings of Motorola and other Tegra powered devices with higher resolution displays. They seemed to be genuinely surprised when Apple debuted iPhone 4 with its own advanced chips and Retina Display. Who knew the most profitable hardware maker could keep up?


Apple Retina Display


Steve Jobs explaining the Retina display at 2010's iPhone 4 keynote event.


In 2011, Google tried to replicate the iPad's first year of success with its own Android 3.0 Honeycomb tablets, which captured much of the attention in the spring. Android also gained broad support for 4G LTE networks, enjoying more than a year or two of a very significant, exclusive feature. And again, there seemed to be an almost disappointed surprise when Apple released its own new stuff that kept iOS at the top of the charts for yet another year."It?s been a long winter? - Gene Munster of Piper Jaffray

Last year, iPad 3 and iPhone 5 brought LTE to iOS, ending a key exclusive feature for Android while also raising the bar for key hardware features from camera and display quality to raw performance. But ironically, the broad series of new products Apple launched last winter have now triggered a new cycle of "that was probably the end of Apple's run" pontification.

"It?s been a long winter,? the MarketWatch report cited Gene Munster of Piper Jaffray as observing. Six months of no major new products, oh my!

There was a time that Apple's annual iPod updates seemed so hard to keep up with that Saturday Night Live spoofed the continual refreshes (below). Seasoned OS X developers will also recall the widespread complaints that Apple was advancing its new Mac platform too rapidly in the first half of the 2000's decade, resulting in a slowing of the interval of new releases from 12 months to more like 18.

Relative innovation

While it's true that Apple's mobile competitors release new waves of products every few months, the level of innovation they achieve in these updates is much less significant. Even huge new flagship product lines, like Samsung's GS4 and HTC's One, are differentiated mostly by app-level features: camera capture and editing or eye tracking playback controls that on iOS would barely pass for a $2 third party app.

The most "innovative" components of the Android platform have been failures, ranging from NFC Google Wallet payments to minor novelties like induction charging (a feature Palm tried to exploit back in 2009 on the Palm Pre, which despite similar media fawning, didn't result in excited customers).

Apple's competitors certainly do have strengths that exceed those of last year's iPhone. Nokia has great camera technology, for example, but it is tethered to an oddball operating system that hasn't proven to be popular even in the enterprise where Microsoft should have some pull. And Samsung has been building ARM chips for years, but hasn't been able to maintain a real lead in performance over Apple, in part because it is straddled to Google's hobbyist Android platform.

Compare the technology deliverables from RIM, Nokia, Samsung, HTC, Microsoft and Google and contrast these with Apple, and it becomes clear why Apple is collecting three quarters of the entire mobile industry's revenues.

What is apparently less obvious is the fact that after collecting all those resources, Apple enjoys incredible capital advantages in orchestrating component sources and building new software and services.

Apple Maps & Apps at WWDC

Case in point: Apple's Maps. Last year, Apple's efforts to evict Google as the default maps provider in iOS 6 were castigated by the media for both perceived minor flaws and certain significant drawbacks. But Apple's Maps were a 1.0 effort, and the extent of its importance and performance is only obvious when you look at what Nokia and Google have released in the year since.


Google Maps 3D


Google Maps 3D still a work in progress


Nokia spent $8.1 billion to buy Navteq to get itself into the maps business. Google has been acquiring mapping companies for half a decade prior to Apple, and has offered its Maps+Navigation product for Android since 2009. Yet in one year, Apple went from being entirely dependent upon Google to being a leading mobile maps provider itself, with a product that compares favorably to the latest apps offered by Google and Nokia.

This would be like Google offering a Microsoft Office alternative and rapidly taking over half the market in one year. Google Docs has been around for more than six years, if you're taking notes. And nobody complains that Docs isn't anywhere near in feature parity with the functionality of every Office app, nor expects Microsoft Office to be instantly obliterated by Google in order for Docs to be anything but a miserable failure.

Speaking of productivity apps, the top selling apps on the top selling tablet platform are Apple's own Keynote, Pages and Numbers. And this comes despite the fact that Apple hasn't rapidly advanced these apps since their original launch, apart from building iCloud integration with its desktop Mac versions.

Passbook, another curious placeholder, has gotten broad support from third parties in its first year. Apple's been coy about where it plans to take this, but it appears the company knows about the potential it has for entering the digital purchasing market, given the vast account leverage it has with iTunes and the App Store.

Morgan Stanley


And speaking of Apple's vast insight into what its iTunes customers buy and like (via Genius), the rumored iRadio should be an equally interesting development.

Analysts and the tech media struggle to comprehend competition

These are the sorts of "product innovations" that the "investment community" is concerned about, and whether such features can prevent the wholesale migration of Apple's iOS customers to Android, something that isn't happening and hasn't happened at any point in the last 6 years of iPhone. Apple is making iOS "stickier," but its customers weren't leaving even back when MP3s made it relatively easy to do so.

So far, this concern has apparently been based on the fact that Samsung and other phone makers that existed prior to the iPhone are still around today. Apple didn't completely obliterate all competition the way Microsoft's Windows 95 effectively did in the mid-1990s, through a combination of exclusive contracts with hardware partners and efforts to block third party development for alternative platforms.

Under Microsoft, the Windows PC market appeared to have vibrant competition, with various hardware partners selling a range of computers at different price points. However, this competition didn't deliver much in the way of true innovation. Between 1995 and 2005, lots of these PC makers merged or went out of business while Microsoft collected the lion's share of profits, but the PC itself remained a pedestrian box with the same overall design and minor annual tweaks in performance specs.

Contrast that to Apple's mobile devices between 2001 and 2011, where the simple original iPod morphed into a powerful tablet computing platform with the world's largest, richest selection of public software and private corporate apps.

iTunes 11


Unlike Microsoft, Apple didn't try to kill the open web as an alternative to its own native apps. Instead, Apple had maintained the world's largest open web browser codebase to ensure that anyone else, from Nokia to Google to Samsung, could build devices running HTML5, achieving the greatest cross platform compatibility that rich Internet apps have ever enjoyed (despite several efforts by Google to derail this).

While the open web eventually helped to break Microsoft's Windows stranglehold on the PC, the openness of WebKit and the HTML5 specification has only helped Apple. That's because Apple isn't competing to end competition; it's working to offer the best products of all of its competitors.

This is why Apple does better when it is competing against several alternatives (as it did in MP3s and early smartphones), rather than just one monoculture, whether real (Windows) or imagined (Android). And conversely, it's also why Microsoft has fared worse with the more competitors it faces. Google's similar business plan is similarly threatened by competition from multiple parties, especially from competition within and among Android licensees and forks like Amazon's Kindle Fire.

That simple reality can't be hidden by any amount of phony market share data for gerrymandered markets that conflate tablets with PCs (but only if they're not iPads), or liberally define "smartphones" in an attempt to bury the iPhone in a sea of junk rather than looking at it for what it is: the most valuable segment of the entire global phone market.

Apple is winning the game it is playing, and that makes WWDC all the more interesting for the insight it will provide on how the company plans to keep advancing its score.
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Comments

  • Reply 1 of 203
    tallest skiltallest skil Posts: 43,399member


    Oh, cloud of doubt. It's an Apple event. It never lives up to the expectation, even when it exceeds the expectation. People (Wall Street) are worthless idiots. If every single Apple product WAS updated simultaneously, as they desire, at every single Apple event, they'd complain that Apple didn't update them enough. 




    They'll never be happy. The point for Apple is to make people (real people) happy and ignore Wall Street. And they're gonna do it. They always do, you know? We're two days out and how many leaks have we had? None. Not a one. Everything we know, Apple has told us.


     


    It's gonna be big. 


     


    Here's to OS X and iOS, as well as hopefully Haswell Macs. And here's to Apple, showing us that they won't give up on workstations. Hopefully.

  • Reply 2 of 203
    anantksundaramanantksundaram Posts: 20,172member
    Updates (+ iPad mini) are not enough, I am sorry to say. I couldn't care less if Apple announced next-to-nothing on the hardware front at WWDC. I can wait until the Fall for that.

    I want to see software ideas that hit the ball out of the park. I want to see software innovation, or at least a roadmap for it, that puts the competition -- especially Google -- years behind and having to catch up.
  • Reply 3 of 203
    souliisoulsouliisoul Posts: 827member

    Quote:

    Originally Posted by anantksundaram View Post



    Updates (+ iPad mini) are not enough, I am sorry to say. I couldn't care less if Apple announced next-to-nothing on the hardware front at WWDC. I can wait until the Fall for that.



    I want to see software ideas that hit the ball out of the park. I want to see software innovation, or at least a roadmap for it, that puts the competition -- especially Google -- years behind and having to catch up.


    Agreed, hardware is easy for Apple, I want Apple to take software to the next level and blow my mind. I have no pre-planned ideas, but Apple have set the standard for software development and looking to be amazed. If I am not then hopefully, it will be major upgrade that keep Apple ahead of the pack.

  • Reply 4 of 203
    65c81665c816 Posts: 133member
    I like this article, and I like to share appleinsider articles that are well written, but when you add things like "Google's hobbyist Android platform", it turns this into a name calling territory.

    Also, why doesn't the chart show the number of Google accounts? I believe that number is on par with what FB has. Comparing the number of credit cards on file would be a better metric.
  • Reply 5 of 203
    512ke512ke Posts: 782member
    I hope a ray of sunshine evaporates your cloud of doubt revealing this editorial to be wildly wrong, disingenuous, and even foolish.
  • Reply 6 of 203
    jessijessi Posts: 302member


    iPod - "no radio, no wireless, less storage than a creative nomad. lame"


    iPhone - "no keyboard, way overpriced, no chance of selling in significant volume"


    iPad - "it's just a big ipod touch"


     


    Hater's gonna hate.  It doesn't matter if Apple releases revolutionary or pedestrian products, the response will be the same. 


     


    The response in the market, however, is different, and it's also what matters.  iOS is kicking butt in the market, google is years behind and seems to have given up on catching up (no android release this year it seems). 


     


    When Apple releases innovations the haters deliberately conflate irrelevant products to claim Apple's just copying (they've got a chip on their shoulder because they know android is stolen goods).  For example, the iPhone has had voice commands for years, when Apple released SIRI the haters claimed that googles voice commands app does the same thing.  Then when google released a SIRI Ripoff they insisted it was much better than SIRI (but what about the google voice commands?  Wasn't that better than SIRI?) 


     


    It doesn't matter to them-- they were wrong about the Mac, the iPod, the iPhone, the iPad, Maps, SIRI, etc. 


     


    They have an amazing ability to forget how they were wrong in the past and make the same claims again, every year.


     


    It is tiresome, though.

  • Reply 7 of 203
    mdriftmeyermdriftmeyer Posts: 7,501member
    Showing Facebook and Google accounts without showing their monetization is a waste of time.
  • Reply 8 of 203
    analogjackanalogjack Posts: 1,073member


    If Apple can generate such excitement with Helvetica, I'd say they have a few years of 'magic' left.


  • Reply 9 of 203
    analogjackanalogjack Posts: 1,073member

    Quote:


    Apple has certainly been lucky over the past decade. Had it faced more focused, responsive competition...



     


    Like Einstein was 'lucky' no one else thought of making time and space relative. We'd be like, Einstein who?

  • Reply 10 of 203
    laytechlaytech Posts: 226member
    Apple has certainly not been lucky, its been dynamic and innovative, its success has not been because of another's failure on the contrary, its through brilliance it has succeeded and as a company mistakes of past should not be repeated.

    The day apple bows to pressure to release products just to please the stock market or fickle journalists or negative bloggers is the day it will be doomed for failure because I'd you can't please those people when you are your most successful you will never please them - period.
  • Reply 11 of 203
    normmnormm Posts: 631member
    I think the doubters have gotten worse. Part of it is that Steve Jobs was so much the face of Apple that it's easy to keep pointing out that he's still dead. Part of it is that Apple is now the most profitable company in the world, and so all their competitors (and their competitor's paid shills) are talking themselves up and Apple down. Part of it is that Apple stock is worth so much that there are enormous fortunes to be made by scaring investors -- to the point that they act as if Apple's prospects are worse than Dell's. And finally, the Apple name is so recognized that everyone tries to get attention for their publication or their cause by making more outrageous claims about Apple than the next guy.

    BTW a typo: it should be "profits" rather than "revenues" (in two places) that Apple gets 3/4 of.
  • Reply 12 of 203
    andre402andre402 Posts: 19member
    65c816 wrote: »
    Also, why doesn't the chart show the number of Google accounts? I believe that number is on par with what FB has. Comparing the number of credit cards on file would be a better metric.

    This was exactly my thought when I spotted the chart.
    Mixing non-comparable data (and selectively skipping some of it) on "informative" chart just creates confusion.
  • Reply 13 of 203
    gazoobeegazoobee Posts: 3,754member

    Quote:

    Originally Posted by souliisoul View Post


    Agreed, hardware is easy for Apple, I want Apple to take software to the next level and blow my mind. I have no pre-planned ideas, but Apple have set the standard for software development and looking to be amazed. If I am not then hopefully, it will be major upgrade that keep Apple ahead of the pack.



     


    Despite what many people believe, and despite them sometimes describing themselves as a "software" company, Apple actually has a long history of "okay" or mediocre software.  I can't think of much they have made that really knocks it out of the park except for the base OS and the developer tools.  The actual user software Apple has made has been uniformly "meh" or has been bought from others.  


     


    For instance iTunes is actually what made the iPod special in it's day and it's competitors had noticeably clunky alternatives, but Apple didn't make iTunes, they bought it from another developer.  What they've added to it over the years arguably makes it worse than it originally was.  iWork apps were created only to spite Office and the very second they got good enough to be viable alternatives all development practically ceased.  iWork was made to sell more hardware.  Apple isn't really interested in making a good suite of Office apps and they certainly aren't interested in making anything better.  They just need a "good enough" competitor and that's it. 


     


    Quicktime probably comes closest to software that Apple made that is "stellar" but again, it was only made in response to Microsoft's attempt to dominate the media format wars, and has (again) dropped off in quality significantly now it isn't needed to sell hardware anymore. 


     


    IMO Apple doesn't actually make great or fantastic software.  It makes "good enough" software that is actually kind of patchy in terms of quality and they never stand behind it either.  You can never tell if Apple really is serious about a software or service or whether it's just something that will disappear next year when the hardware and market priorities change.  You can't really *rely* on Apple's software.  

  • Reply 14 of 203
    irelandireland Posts: 17,737member
    Welcome to anti-every-company-that's-not-Apple, Insider.
  • Reply 15 of 203
    irelandireland Posts: 17,737member
    jessi wrote: »
    iPod - "no radio, no wireless, less storage than a creative nomad. lame"
    iPhone - "no keyboard, way overpriced, no chance of selling in significant volume"
    iPad - "it's just a big ipod touch"

    Hater's gonna hate.  It doesn't matter if Apple releases revolutionary or pedestrian products, the response will be the same.

    iWatch - "people don't wear watches anymore" or the inevitable question: "will this be the next iPod? iDoubt it"
    iTV - "the TV business is too commoditised, too competitive; you can't make money selling TVs"

    The pundits know nothing. They called the iPad 'just a big iPod touch' and it turned out to be the most important computer in the history of the world.
  • Reply 16 of 203
    dick applebaumdick applebaum Posts: 12,527member
    Updates (+ iPad mini) are not enough, I am sorry to say. I couldn't care less if Apple announced next-to-nothing on the hardware front at WWDC. I can wait until the Fall for that.

    I want to see software ideas that hit the ball out of the park. I want to see software innovation, or at least a roadmap for it, that puts the competition -- especially Google -- years behind and having to catch up.


    Here's the deal, IMO...

    Step 1: Bring all the Mobile apps to the Desktop -- allow any/all iOS apps to rurn on the desktop -- Maps, Siri, Proloquo2go... whatever.

    While it may not make sense for some apps, it does for about 80% of them.

    It is good for Users, Developers, the Apple Halo, Apple and AAPL.


    This blows away the competition:
    • Microsoft doesn't have the mobile apps to compete on the Windows 8 Desktop
    • Google doesn't really have a Desktop to run its mobile apps


    Step 2: Make it so most/any of these mobile/desktop apps can run on the web and AppleTV.

    Step 3: Make it so most/any of the desktop-only apps can run on the web or mobile devices (as hardware power and bandwidth permit).

    OK, you guys skin that bear while I go catch another :}
  • Reply 17 of 203
    sockrolidsockrolid Posts: 2,789member



     ... the "investment community" is concerned...




     


    Big f-ing deal.


     


     


     




    "It’s been a long winter,” the MarketWatch report cited Gene Munster of Piper Jaffray as observing.




     


    Oh yeah.  Munster.  The guy who has been predicting an Apple-branded TV set for the past 3 or 4 years.


    Someone please remind us all again why we should listen to Mr. Muster.  Or not.


    And maybe it's time we downgraded Mr. Munster from "analyst" to "industry observer."

  • Reply 18 of 203
    souliisoulsouliisoul Posts: 827member

    Quote:

    Originally Posted by Gazoobee View Post


     


    Despite what many people believe, and despite them sometimes describing themselves as a "software" company, Apple actually has a long history of "okay" or mediocre software.  I can't think of much they have made that really knocks it out of the park except for the base OS and the developer tools.  The actual user software Apple has made has been uniformly "meh" or has been bought from others.  


     


    For instance iTunes is actually what made the iPod special in it's day and it's competitors had noticeably clunky alternatives, but Apple didn't make iTunes, they bought it from another developer.  What they've added to it over the years arguably makes it worse than it originally was.  iWork apps were created only to spite Office and the very second they got good enough to be viable alternatives all development practically ceased.  iWork was made to sell more hardware.  Apple isn't really interested in making a good suite of Office apps and they certainly aren't interested in making anything better.  They just need a "good enough" competitor and that's it. 


     


    Quicktime probably comes closest to software that Apple made that is "stellar" but again, it was only made in response to Microsoft's attempt to dominate the media format wars, and has (again) dropped off in quality significantly now it isn't needed to sell hardware anymore. 


     


    IMO Apple doesn't actually make great or fantastic software.  It makes "good enough" software that is actually kind of patchy in terms of quality and they never stand behind it either.  You can never tell if Apple really is serious about a software or service or whether it's just something that will disappear next year when the hardware and market priorities change.  You can't really *rely* on Apple's software.  



    I can accept your point of view, but do not agree, If majority of Apple's software was 'ok enough', you would not have the customers seeking to switch to Apple, since I view Microsoft's software has 'good enough' since it is so damn diffcult to learn their software especially when MS undertake a major upgrade  and Apple just makes it simple. 

  • Reply 19 of 203
    irelandireland Posts: 17,737member
    analogjack wrote: »
    If Apple can generate such excitement with Helvetica, I'd say they have a few years of 'magic' left.

    LOL. I'd bet that was Jony's doing. I'd LOVE, LOVE, LOVE to see Jony taking on Steve's role. Not as CEO, but as creative decision maker across the board, pretty much as Steve did. In other words, I'd like too him have final say on their marketing, too.
  • Reply 20 of 203
    matrix07matrix07 Posts: 1,993member

    Quote:

    Originally Posted by mdriftmeyer View Post



    Showing Facebook and Google accounts without showing their monetization is a waste of time.


    Agree. Why showing Google account at all if their major revenue is still advertising? Isn't that a proof only a fraction of their user base willing to use that account or registered credit card. This applies to facebook too.


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