What’s Apple’s competitive edge going forward?

The Wall Street Journal has an article on Apple reaching a revenue plateau. It isn’t surprising that revenue is heading down, but the quote from management is disturbing:

In an interview with The Wall Street Journal, Apple Chief Executive Tim Cook said he remains optimistic, noting that he sees future gains for iPad and continued growth from services such as Apple Music and other projects.

“We don’t live in 90-day quarters, and we don’t invest in 90-day quarters,” said Mr. Cook. “I’m so convinced that the things we are doing are right and the assets we have are enormous.”

Apple Music? Even if the company got a 100-percent market share in recorded music how could that move the needle for a company with roughly $233 billion in annual sales? If this is what the company’s management is relying on, investors should be terrified. (And Apple music is a crummy me-too product.)

What are Apple’s competitive edges going forward that could lead to substantial revenue and/or profit growth? The iPhone per se doesn’t seem like one of them. My iPhone 6 Plus became unstable in its 6th month of life, with hangs and crashes roughly comparable to what one might experience with Samsung’s version of Android on an older Note device. The Apple Health app is comically sloppily programmed and its user interface is inferior to what Samsung was offering with the Note 3 two years ago. People whom I know in professional video say that Adobe Premiere is at least as good as Final Cut Pro and that Apple lost a lot of loyalty with a major user interface change to Final Cut.

What about Apple’s supposed leadership in user experience? Plainly the Apple Health programmers didn’t get the memo, but surely the core iOS has a better/cleaner user interface than any Android or (gasp!) Windows phone? I might have thought so until I visited a neighbor. She is intelligent and well-educated, but not passionate about technology. She said that she had hardly gotten any phone calls for weeks. I discovered that her phone was in “Do Not Disturb” mode. She had entered this inadvertently by mistakenly swiping up from the bottom of the screen then touching the moon symbol (a nice icon but there is no explanation of what it means). No programmer at Apple had thought to have the phone display a confirmation dialog box after a few days in DnD mode. I decided to be a hero and reconfigure her phone so that this mode couldn’t be entered inadvertently. I would remove the moon icon from the quick swipe-up menu. Then I discovered that Apple was so confident in its broken user interface that, unlike with Android devices, there was no way to customize the choices.

Readers: What does Apple have that is way better than the competition? What should they be working on going forward? (they’ve got plenty of cash to do all of the R&D that they want, at least as long as they hire all of the programmers offshore so that they don’t have to bring the money into the U.S. and pay corporate taxes on it)

(My personal vote: Camera software. Sony and Samsung have slightly higher scoring cameras on DxOMark, but my experience with a Samsung Note 3 was that its practical capabilities were far behind the test scores. Maybe Sony is better. DxOMark says “Impressive autofocus in all conditions, the best tested to date” and “Very good white balance and color rendering in most situations” regarding the Sony Xperia Z5. Perhaps the Sony is actually the photographer’s best phone choice? (And the device is actually waterproof; rated IP68!))

15 Comments

  1. Jonah Goode

    January 26, 2016 @ 10:19 pm

    1

    I definitely agree since all of apples products are going to, or have become commodities. The Ipad Pro for example is selling worse that the Surface Pro. I guess because no one wants to pay 1000$ for a tablet whos main users are Cats and Toddlers. When you can get android and amazon tablets for under 100$. Also their Iphone 7 is going to have it’s work cut out for it against android phones. When there’s the Honor 5x whose build build quality is on par with the Iphone while only costing 200$ off contract. But Apple still does have it’s marketing and branding genius though.

  2. paddy

    January 26, 2016 @ 10:38 pm

    2

    Imagine my surprise when my brother told me that one reason he got the iPhone 6 was due to Wifi calling (calls go over Wifi, therefore if you are in a foreign country but connected to Wifi there are no extra charges on your bill – the call behaves as if you called from inside the USA for a USA subscriber).

    My ancient BlackBerry had this feature – in 2009.

    Basically Apple is suffering from the same problems that NeXT had – they don’t keep up with the underlying Unix level, or other broad markets, and thus end up in a ghetto of their own making.

    At any point, NeXT could have simply and easily ported X Windows to NeXT, allowing for thousands of apps to be remotely displayed on NeXT machines. They didn’t – and 3rd party solutions weren’t as good, plus cost extra – so NeXT as a Unix/X terminal plus good personal apps, wasn’t a use case available for those who wanted to buy NeXT. Those customers ended up buying SGI or Sun workstations instead.

    At any point, NeXT could have done the work to ensure that POSIX compliance was in the base Unix they shipped – they didn’t – therefore no one in the FedGov could buy their product (POSIX compliance was mandated) without more paperwork and getting a special exemption signed off on. This alone easily cost NeXT millions of dollars in sales, maybe more.

    What is Apple doing that is equivalent? Every walled-garden approach that cuts off integration, in pursuit of short-sighted profit.

    No SD cards (not a cost or manufacturing issue) – just a way to force people to buy embedded flash at far-above-market costs.

    Changing cord types from 30pin to Lightning, and dumping FW for ThunderBolt – purposely breaking compatibility and forcing an ecosystem-wide upgrade.

    No upgrade path for their overpriced laptops – again, a way to force people to buy soldered-on RAM and embedded SSD storage at prices far above market.

    I bought a 1TB SSD at retail for under $300 – something that I can’t get for any money in a Macbook Air, and for which I have to splash out on a MacBook with Retina display (no reason it couldn’t go in a non-Retina MacBook which has the exact same form factor).

  3. Andrea

    January 27, 2016 @ 3:03 am

    3

    Plus, if water somehow gets into your MacBook Pro Retina and fries your motherboard, the you can’t just pop out the SSD and put it in a standard 2.75″ USB sled to get your data out. You need a custom sled which is nearly impossible to find and costs $150 (different vintages of MBPr need different sleds). Apple stores won’t do it for you (but they will show you the sled, presumably to taunt you).

  4. Federico

    January 27, 2016 @ 3:18 am

    4

    A thoughtful piece on how Apple has move far too far in the direction of minimalist design and user interface:

    http://www.fastcodesign.com/3053406/how-apple-is-giving-design-a-bad-name

  5. Lynn Clark

    January 27, 2016 @ 3:44 am

    5

    Other than getting into over-the-internet TV, which if past history is any indication, they would quickly dominate (and put cable TV companies out of business — yay!), I can’t think of anything else they have going for them.

    Their OS X annual-major-update schedule has done nothing that I can see to improve, or even maintain, quality. It used to be that you could safely upgrade to each new major version of OS X with high confidence that everything would go swimmingly well. That is no longer the case. Now, you’re taking your data/life into your own hands if you dare to upgrade to a 10.x.0 version of OS X. Having been bitten by this too many times in recent years, I’m still going to wait until Apple releases the next OS X version after the current version (10.11.x El Capitan) before I even *think* about upgrading to El Capitan from 10.10.5 (Yosemite). A few weeks ago my brother upgraded to El Capitan but a day later restored his system back to Yosemite from a backup, because it inexplicably changed the behavior of a monitoring application that he kept open. In Yosemite, it would patiently run in the background until he wanted to see it. In El Capitan, it insisted on staying in front of every other window on the desktop with no way to make it go into the background. Why would Apple force that behavior and provide no way to change it?

    It also used to be that things just worked like a reasonable person would expect them to work. That is no longer the case. Way back in OS X Snow Leopard (10.6.x) days, I used to be able to view videos in full-screen on the built-in display in my iMac without having my external monitor go blank. Since OS X Lion (10.7.x), that is no longer possible, and there’s no way to tell it not to do that. Why would Apple assume that if I want to watch a video on the built-in display, that I want my other display to go black? Fortunately, some third-party applications (like Firefox and Chrome) don’t emulate this behavior, so I can watch youtube videos full-screen on the built-in display and still have use of the external display. But AFAICT, all Apple applications implement the blank-the-external-display-when-the-built-in-display-is-in-full-screen-mode behavior. Why, Apple? Why?

  6. Longleaf Jednfals

    January 27, 2016 @ 10:06 am

    6

    Interesting questions.

    I wonder if one can count Apple’s cash hoard as a competitive advantage. They are in the enviable position of being able to take 2 or 3 real flyers on huge technological leaps.
    I don’t count their car program as being one of these, but one thing I’ve been wondering for a while is if it would make sense for Apple to launch the first true low-latency, high-bandwidth, worldwide wireless Internet service. This would presumably be provided (at least partially) by LEO satellites which means the capital outlay is, ahem, significant. Iridium was such a bomb, though, that companies have treated this space as radioactive.

    Of course, as a lover of the lonely, wide-open spaces of the world, I fear and loathe the coming of ubiquitous cat-video streaming. Nothing like standing in a beautiful and remote Alaskan river valley only to overhear your companion watching Colbert in her tent.

    I do iOS development, and from my developer’s POV, Apple is going down the tubes. XCode, the IDE that must be used to do any GUI development for Mac or iOS, has gotten more and more unstable and unpredictable. The release of the Swift language, while very welcome, has been marred by a haughty disregard for the realities of development. It was billed as production-ready but sure isn’t; Apple continues to make major syntactic and semantic changes in the language on a regular basis, which places abnormal maintenance demands on anyone who has written anything significant in Swift. This might be OK except they don’t just deprecate old language versions, they annihilate them and keep XCode from even being able to compile them – in other words, one HAS to port. After many years, XCode is still not a good fit for any kind of medium or large dev team. Even its internal file formats are still best suited to an lone developer, not a team developer (anyone who has struggled to deal with merging storyboards or PBX files in source control knows what I mean). And finally, the distribution model and mechanisms are one of the biggest, most unreliable software messes I’ve ever seen. Show me a developer who understands the spaghetti of certs, provisioning profiles, dev profiles, keys, code signing assets blah blah blah and I’ll show you someone who should make $5 million a year. We’ve even been using Apple’s new TestFlight for beta distribution and it just doesn’t work about 80% of the time.

    But…Apple doesn’t get much revenue from external developers and external apps, do they? In my opinion, iOS/OSX as development targets are NOT a competitive advantage for Apple!

    Now, for web dev though, I love me my Mac!

  7. Henry

    January 27, 2016 @ 11:36 am

    7

    The last time I looked Windows was a horrible environment for development, servers, and users.

    People always say that the only reason Windows is a cesspool/minefield of computer malware and viruses is that it’s a larger target. Possibly. But given the choice of bathing in the cesspool or using a reasonable computer operating system and GUI, I’ll skip the cesspool.

    The reason that nobody at our company develops on a PC is not because they are snobs, but because using Windows is still a nasty brutish experience. As long as there is a big pool of Windows users in corporate America, I think Apple has a good deal of growth. There is really no alternative. I think the ChromeOS example shows that you cannot have a browser based OS yet, although maybe someday not too long from now it will be more plausible.

  8. Martin

    January 27, 2016 @ 1:42 pm

    8

    Apple seems have forgotten their core audience that got them where they are today. Content creators, especially those working with video or images, but desktop users in general.

    Sure, desktop environments have matured in recent years, but it’s as if Apple stopped innovating once they found how much money they could make off the iPhone.

    Yes, there are plenty of things that drive me nuts about Apple – mostly the software. But don’t get me wrong, I like Apple products. I used both Windows and Linux for years before switching to a Mac and wouldn’t go back. My iPhone works well for what I need and by comparison, Android devices seem cluttered and confusing in my view.

  9. djk

    January 27, 2016 @ 3:29 pm

    9

    What’s funny (and by that I mean sad) is that it seems no one can talk about technology anymore without drawing an angry line in the sand. You’re either supposed to HATE APPLE AND EVERYTHING IT REPRESENTS or… really, that’s about it. No one is allowed reasonable discussion anymore, and it mainly seems to revolve around some twisted sense of brand loyalty. Most of the things brought up in the comments so far are the same arguments that have been flying around for about fifteen years.

    I think a competitive edge they will have is the money and person-power to further develop the balance of brand, style, and utility necessary for consumers to accept lifestyle device technology. The ipod, iphone, and apple watch have all inched toward that.

  10. saurav

    January 27, 2016 @ 8:48 pm

    10

    The main reason behind Apple stagnant grwoth rate in years is that its flagship so called overpriced phone are no longer unique in the system. You have a phone at every price range with almost every capability that an iphone provides.

  11. Raleigh

    January 27, 2016 @ 9:06 pm

    11

    The obvious answer to your first question is coolness. Sex trumps all.

  12. Mark

    January 28, 2016 @ 5:11 am

    12

    Well, they sure didn’t ring the bell with that watch, did they?

  13. Raleigh

    January 28, 2016 @ 7:11 am

    13

    The watch? That’s definite shrinkage.

  14. Senorpablo

    January 28, 2016 @ 3:18 pm

    14

    All the US mobile providers have gone, or are going away, from subsidized phones. They now offer payment plans, but as a result, the true cost of premium phones will become more apparent to the consumer. There are a number of excellent Android phones around $200(Moto G), and iPhone competitors such as the Nexus 6P(camera rated higher than iPhone 6 @ Dx0) are hundreds less than an iPhone. Apple can’t compete on a price for performance basis. Shifting mobile phone purchase models will sting for Apple.

  15. Tom

    February 1, 2016 @ 5:36 pm

    15

    Historically, their edge is building cool devices. More precisely, Apple has been good at making devices for engineers and offices into cool, usable stuff. Are there any such markets around? (Apple Car?)

    They also have an edge of sorts in their big pile of cash.

    They seem to fail at the current trend of enormous online services. Even their core App Stores are second-rate compared to shopping at Amazon. It’s sort of pathetic to hear the cries of app developers about getting onto various top lists.

    If they want to go into online video more deeply, just buy Netflix.

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