What’s Wrong With Apple & How They Can Fix It

Tech Features

Anyone who knows me, knows I’m what the kids call an Apple fanboy. I got my first Apple—a Centris—back in the early ‘90s and have never owned a computer by any other manufacturer since. I bought the first-generation MacBook, the first-generation iPhone, and the first-generation iPad on the day it was released. Obviously, I’ve been deeply satisfied and have evangelized about Apple to anyone who would listen.

So, what’s the problem? Apple hasn’t innovated on the software side nearly as quickly as they have on the hardware side, and this is going to prove very harmful for the company.

Apple is still indisputably the hardware King; the new MacBook Pro with Retina display is the best computer—not just laptop, but computer—you can buy. The Air comes in a close second. The iPad/iPhone juggernaut too is pretty much beyond reproach (the iPhone clearly needs, and will get, a refresh this fall. And it seems very likely that we’ll see a 7” iPad soon).

The problem is iTunes. It launched as a killer app. It made listening to music and organizing your collection a seamless experience between two pieces of hardware: your computer and your iPod/iPhone/iPad.

iTunes Match is decent, but Apple’s refusal to really embrace innovation with respect to Cloud-based media is where things started going off the rails. Things went further off the rails with their reluctance to de-couple the music from TV/Movies in iTunes (even the name—iTunes—is out of date; it’s outgrown its name in the same way it’s outgrown its usability). As a result, the UI is a nightmare.

During the time that Apple didn’t innovate others did.

Whatever you think of the business models of Spotify, Pandora, Netflix, Amazon Instant Video, Hulu, etc., for many people they’ve become de facto parts of our media consumption experience.

None of the above have any exclusive tie to Apple hardware. In fact, Apple, in some respects, represents a hindrance to the consumption of the above (Amazon Instant, for instance, will not work with the iPad/iPhone).

Once the software becomes de-tethered from the hardware, the hardware becomes commoditized. That is, customers begin looking at hardware purely as a tool that helps them achieve a goal; in this case, the customer’s goal is to effectively (from a performance and cost standpoint) consume their media.

When I was visiting my parents, for example, I wanted to listen to music on their porch while I read a book. I opened my iPad, and then opened Spotify for music, and then opened the Kindle reader for my book. Watching a movie later that night, I opened my iPad, searched for something on Hulu Plus, Netflix, and the PBS apps, prior to finding something on HBO Go.

In other words, I did not open my iPad, then open iTunes for my music, and then iBooks for my book. Later, I did not open my iPad, then open iTunes for video.

Why not? Because Spotify offers a better music experience than iTunes, the Kindle App offers a better reading experience, and pretty much everything offers a better movie watching experience than iTunes.

The only Apple-related element in the above value-chain? The iPad.

It’s undeniably great. However, is it so much greater that many will continue to pay the premium for the hardware when the software they want has nothing to do with the hardware, and runs equally well (or better) on other devices? Particularly, when these other devices are significantly cheaper. The Nexus 7 from Google, for instance costs $200. The Kindle Fire (due for a revamp) costs roughly the same.

While I haven’t yet spent time with the Nexus 7, I have spent a good deal of time with the Kindle Fire. I was surprised by how much I like it, and by how quickly I could access the content I wanted to on it. The early reviews on the Nexus 7 are fairly glowing.

This, again, takes us to the key element: software, or, in the parlance of mobile phones/tablets, apps.

Apple, via its App Store, remains the undisputed king of apps—if not in sheer numbers, certainly in quality. This is largely due to Apple’s tight approval process and standards. However, an interesting trend is developing: Apps that become very successful for iOS (Apple) are porting quickly to Android (Nexus 7/Fire/etc.). The iOS environment has become something of a coliseum: Survive/thrive in the Apple App Store, and the developers will port a version for Android; fail in the App store and don’t bother.

The best iOS Apps—determined by the only adjudicator who matters: the customer—are now becoming rampantly available for Android. Consider, for example Instagram’s iOS-to-Android defining moment. Certainly, the vast majority of App developers begin with iOS versions—it’s where the money/market share is—but, increasingly, upon finding success in the App store, they quickly port to Android. This will accelerate. As a current example, the number one free App in Apple’s App Store is…Chrome for iOS. Why? Because Safari (Apple’s native web browser app) stinks. While Safari for iOS is slated to include features like synching tabs between devices when it’s updated this Fall, guess who has that feature now? Chrome for iOS.

As this acceleration of either apps being developed natively for Android, or successful apps going more quickly from iOS to Android continues, yet another competitive advantage of Apple’s falls away.

So, what is Apple to do?

First, the hardware is important. As nice as the Fire is, and the Nexus 7 seems to be, for content consumption, their size and processing power really limit their use for content creation. At this point, the lame argument that the iPad is not a content creation tool seems behind us; example after example show that it really does facilitate all sorts of creation.

This goes not just to internal hardware, but form factor. The difference in size between the iPad and its competitors pretty much cements Apple’s position in the lead here. Trying to write, for instance, on the Fire (even with an external Bluetooth keyboard) is only marginally different than trying to write on an iPhone; an iPad, on the other hand, is perfectly sized for this usage.

This explains Apple’s strategy of embracing software for creation, and refining its form factor/innards to accommodate increasing creation demands.

Apple must keep innovating here. Jobs famously quipped that the Apple laptop is “a bicycle for the mind.” What he meant is that it is a tool for creativity. Apple products, at their core, inspire creativity (consider their “Think Different” ad campaign). Whenever a product/service is perceived by the customer as being something that will make them (the customer) better/more creative, it’s an almost impossible-to-defeat competitive advantage.

The Fire and the Nexus 7—based on their form factor and processor power—seem to have ceded this to Apple. Apple must extend its advantage. Of course, it now looks fairly certain that Apple will introduce a smaller (7-inch?) iPad soon. While neither Google nor Amazon has a profit margin on their 7” tablets, I bet Apple finds a way to make money with a 7” iPad, even at a ~$200 price point. Again, hardware!

The other huge category that Apple is capable of dominating is the living room. Again, they’ve mis-stepped massively via their wonky AirPlay implementation and allowed Sonos to just own them. Not to put too fine a point on it, but I can just as easily control my Sonos speakers with apps on an Android device as I can an iOS device. However, Apple could quickly and easily resolve one of the most-ready-for-disruption institutions out there: The TV and its remote.

I don’t want Apple to make a TV (though, if they did, I’d buy one). Rather, I want them open an App marketplace for the existent AppleTV. Apple could do this right. Imagine, for instance, turning your TV on, going to AppleTV, and seeing apps for everything from games to video podcasts to music. There are currently TVs with apps (lower case) built in, but they stink. The main reason they stink is because they’re impossible to navigate, organize, and update—oh, and also—the functionality and selection are both pitiful.

The Apple Remote App that operates the AppleTV is OK (certainly an improvement over the one that comes packaged with the AppleTV), but it hasn’t been updated in eons, and it really only sort of does what you need. One would think it would not take much Apple r&d to come up with the killer remote app that would run exclusively on the iPad/iPhone and integrate—via the AppleTV—with your content.

Once accomplished, and once Apple gets over Jobs’ wrong-headed belief that people want to rent movies, but own their music (download, not stream), such a setup could really cement not only Apple’s dominance in the living room, and secure the need for continued loyalty to their devices. That is, this set up would only work if you controlled it via an iPad/iPhone—you’re out of luck if you have a Fire/Nexus 7.

I love Apple, I really do. I do believe they make the best hardware there is. I also believe that their core competitive advantage is that they do make you feel more creative when you use their “tools.” Second, I believe Apple can de-kruft UIs better than just about anyone (the embarrassment that is iTunes notwithstanding). However, they’ve blown it by focusing nearly all of their innovation prowess on the hardware and not the software. Other hardware manufacturers are catching up, and the software (App) makers are happy to feed this market.

You can discount everything I wrote above if you like, but the single best way I can prove my point is to tell you that I’m seriously considering buying a Nexus 7. I have never seriously considered buying any non-Apple product in decades.

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