Could Apple be faced with the classic innovator’s dilemma?
About 10 years ago I got bit by the Apple bug. A friend sold me his original Mac Mini running a G4 processor, and I was immediately hooked. At the time the machine was no powerhouse, however it was quite capable for basic computing tasks of the time. It died a few years later following lots of use, probably of a failed hard drive, though by then totally obsolete and not worth trying to repair.
Once Apple made the switch to Intel chips, I was all in. Apple computers were more expensive, but at that time Apple gave good value for the extra cost. My first two Apple laptops could actually be upgraded with larger capacity hard drives and more memory. The now 9-year-old white plastic MacBook still boots up and works well helped by the addition of an SSD, and the 17” MacBook Pro from 2007 still works though has developed a stuck mouse button problem. The problem with both of these machines is that technology has continued to move forward and my expectations have changed.
If we look back, technological devices are continually converging. The most useful functions of a particular device almost always get recombined into new convergence devices. The original devices may end up going completely away, or can end up as specialty devices. Device convergence pressures are relentless, driven in large part by new technical knowledge.
Steve Jobs seemed to have a particularly good knack for being able to pick out which convergence devices would catch on with the public and position his company to take advantage of what he saw coming. Like an expert surfer setting himself up for major waves, Jobs did this with the iMac, the original iPod, the iPhone and the iPad. Jobs also had the ability to pivot if he saw that his personal predictions were wrong, for example adding apps to the iPhone after famously saying people didn’t want apps on their smartphones.
After he knew his death was impending, Jobs is said to have left Apple with at least 5 years’ worth of new product ideas.
Since the death of Steve Jobs more than four years ago on October 5, 2011, Apple has gone on to become the richest corporation in history. However, that success is perched precariously on the continuing phenomenal sales success of the iPhone.
In the meantime, technology and customer expectations have marched on. The pressure for device convergence yields for no one. Capacitive touchscreens now dominate the landscape. Gordon Moore’s Law continues its march forward towards smaller, cheaper and faster.
In portable computing, I now have a tablet in the form of a Surface Pro 3 running Windows 10 that is also a real PC capable of running desktop software. Since getting the Surface Pro 3, I am using it for everything – writing articles, podcast audio recording and editing, HD video editing including 4k, watching movies, and another use that turned out to be a total surprise. The Surface Pro 3 (and 4) comes with the Microsoft Pen. I now find myself motivated to learn the skill of drawing and digital art, which came completely out of left field.
My computing expectations have changed. I want a true convergence device. Apple doesn’t offer such a device. Furthermore, Cook keeps resisting the convergence idea itself.
Tim Cook again today discouraged the idea of making a Mac/iPad convergence device. Quoting Cook:
“We feel strongly that customers are not really looking for a converged Mac and iPad. Because what that would wind up doing, or what we’re worried would happen, is that neither experience would be as good as the customer wants. So we want to make the best tablet in the world and the best Mac in the world. And putting those two together would not achieve either. You’d begin to compromise in different ways.”
Why not experiment? Cook’s statement is couched in terms of “protecting” the customer, and “worrying,” but I believe something else is going on. Cook is afraid of radically altering the iOS experience, after all the iPhone is Apple’s giant cash cow. Why wouldn’t Cook want to innovate iOS beyond altering its cosmetics? Is Cook reluctant to tamper too much with the iPhone for fear of damaging iPhone sales?
Has Apple ran into the innovator’s dilemma?
Alas we have perhaps run into a fundamental difference between Tim Cook and Steve Jobs. One of the hallmarks of Steve Jobs was his willingness to cannibalize existing sales with new product convergence devices. For example, the iPhone cannibalized iPod sales because the iPod function was converged directly into the iPhone.
The new iPad Pro at the end of the day is just a physically larger, faster iPad. Trying to use the iPad for anything more than a media consumption device is a genuine pain. The iPad itself is just a giant iPod Touch. An iPod Touch is an iPhone without the phone.
Thus, the innovator’s dilemma. Does Apple come out with a tablet that is also a touchscreen Mac similar to the Surface Pro 4, or a touchscreen Mac that also doubles as a tablet similar to the Microsoft SurfaceBook? Would such a hybrid device cause customer expectations for the iPhone to change in ways that might negatively impact sales?
Apple as a corporate machine is showing signs of rusting around the edges. Recent software and hardware product releases haven’t gone smoothly. Products seem rushed out the door before they are ready for primetime. Some customers waited months for the pointless Apple Watch. The new generation 4 Apple TV has interface problems, as well as bugs. The latest version of OS/X El Capitan is afflicted with many continuing bugs. iOS 9.x has continuing bugs. Even the new iPad Pro was inexplicably put on sale without the availability of the Apple Pencil stylus or the Apple Keyboard, both initially sold as being fundamentally important to the existence of the product. These problems would have never been tolerated or allowed to happen if Steve Jobs were still around running the Apple show. The well-oiled machine that was Apple under Steve Jobs is starting to fall into corporate dysfunction.
Apple has plenty of money in the bank, and iPhone sales are likely to continue to be strong in the short to mid-term, even if the nature of the iPhone itself isn’t fundamentally altered. That being said, technical knowledge and Moore’s Law continue to march ahead. Customer expectations change – will Apple?
