Apple is losing the innovation race. The most admired company in the world was built by visionary Steve Jobs who had the power of imagination. He could deliver products that very few could even imagine. His successor Tim Cook has been successful in making the iPhone screen size bigger since Jobs passed away in 2011.
Apple once commanded a growing market share not only in United States but also in China. Cook even traveled to India in 2016 where he expressed his optimism in the Indian market. In the past decade, iPhone rival Google Android platform has expanded worldwide. In addition to rivals like Samsung and LG, several Chinese companies have developed iPhone look alike devices powered by Android. They focused on lowering cost, creating better camera and making battery that lasts long. They also benefit from Google’s ease of letting app developers launch mobile applications much cheaper and faster. Together, these Android powered phones and Google have been successful in cooling off the demand for iPhone. They became dominant player in their home countries and then expanded to other geographies, most notably to India where a billion plus population was ready for smartphone adoption. While all this kept on happening in front of him, Tim Cook took the Apple brand for granted. He couldn’t imagine anything new. He just focused on making iPhone size bigger.
Steve Jobs left Apple in the hands of a man who was apparently a good operations manager. Lack of innovation in hardware is increasingly making Apple a software company. Historically, Apple generated most revenue from hardware devices. While Apple isn’t going to vanish anytime soon, the growth driver hardware sales has slowed down. Apple generates a significant percentage of revenue from iOS App developer platform. This will remain as useful as the number of iPhone users. Once this number plummets, Apple will no longer be able to force developers to pay $100 per year to subscribe for app developer program. Neither would it be able to collect transaction revenue. In other words, its software is only as valuable as the number of iPhone users. Just like Snapchat does not care much about Android app since its most valuable users are in United States, a growing number of tech companies outside of United States don’t care even to develop an iPhone app. If this continues, Apple would be left only with US or few other developed markets. Where would the growth come from?