Apple’s innovation problem is real


Apple announces iOS7. The new update overhauls the operating system for the iPhone, iPad and MacBook.

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NEW YORK (CNNMoney) — Apple’s innovation problem is real. And it’s unlikely to silence the critics if it simply unveils multi-colored iPhones on Tuesday.

Rivals have caught up to Apple in the markets it once dominated, and the tech giant’s rumored future products appear to be more evolutionary than revolutionary. A smartwatch and an “iTV” are intriguing, but they’re niche products that won’t set the world on fire like the iPhone and iPad did.

Plus, the golden days of hockey-stick-like growth in Apple’s core products are over. Phones and tablets from Samsung and others who make devices running on Google’s Android have outsold the iPhone and iPad. Apple’s shares have tumbled 30% over the past year, partly due to concerns that Apple has nothing new up its sleeve.

So can the company come up with an exciting innovation to launch itself ahead of the competition once more?

Despite its reputation, Apple has rarely been in the business of creating entirely new markets. Apple didn’t invent the PC, the MP3 player, the smartphone or the tablet.

Instead, the company typically lets competitors stumble over themselves in their attempts to be the first to market. Rivals build up consumer awareness for a new type of product, and then Apple steps in with a highly-refined device full of features nobody has seen before.

The problem for Apple is that the markets it’s about to jump into are all unproven.

Wearable devices are a hot trend in tech, and Apple is almost certainly cooking up a smartwatch. But the wearable space is still extremely young, and Apple has to worry about both delivering a polished solution and convincing the masses that these devices are as necessary as laptops or smartphones.

Multiple rivals have been working on a future-of-television solution, including Google, Intel and Microsoft. But cable operators have largely been unwilling to play ball. Without their consent, an Apple “iTV” likely won’t change the way we buytelevision shows the way that iTunes changed the way we buy music.

One dark horse, however, is Siri: the voice-powered search engine that lives on iOS devices. Siri has been treated as inconsequential — or even a joke — since it first appeared on the iPhone 4S in 2011. But it’s easy to see Apple pushing Siri in a direction that extends beyond voice search.

For example, Siri could link together your smartphone, tablet and PC so that the experience of moving between devices is more seamless than ever before.

Eventually, Siri could become the central brain of your home. If Apple developed an ecosystem for managing and linking connected appliances together (light bulbs, door locks, ovens, the Nest thermostat, etc.) with its own product ecosystem, Apple could find itself in front of the smart home revolution.

AT&T, Google and others have also delved into the connected home. Using smartphones and connected appliances to power your entire house is a big vision. So far, the technology isn’t cheap or universal enough yet to become all that useful.

But the so-called Internet of Things is likely to be huge. Amazon has even dedicated an entire section of its online marketplace to this category. And with Siri, Apple could be an early standout in this burgeoning market.

Now does Apple need to latch on to every new tech trend to stay relevant? Not at all. But to focus entirely on its established products doesn’t seem like a smart strategy either.

By Julianne Pepitone and Adrian Covert

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