Today, Apple reported a record quarterly profit of $54.5 billion with marked sales growth for its iPhone and iPad lines. And yet, in the weeks leading up to today's Q1 earnings report and even the hours that followed, analysts, the media, and the company's stock valuation seemed to suggest that Apple is failing and spiraling toward uncertain future. So, why the staggering disparity between Apple's perceived failings and its irrefutable monetary success?
Even the most minute details of Apple's operations are publicly scrutinized.
Apple's massive financial and commercial successes have come with heightened expectations. After years of constant growth, any direction but up raises red flags for analysts and investors. Unlike its competition, even the most minute details of Apple's operations are publicly scrutinized. Earlier this month, The Wall Street Journal published an unconfirmed report claiming that Apple had canceled over half of its manufacturing order for the iPhone 5 due to weak demand. The report sparked a frenzy of similar rumors from anonymous sources both refuting and supporting the claim, resulting in a significant drop in the company's stock valuation.
Of course, supply chains are commonly used by analysts as a barometer for a brand's successes and failures in the consumer electronics market, but few, if any, are followed as fervently and by such a wide audience.
But it's not just the finer points of Apple's business operations that have been met with skepticism in Wall Street and amongst the media. Apple's capacity for innovation and quality is constantly being disputed as of late. And in the case of its recent iOS 6 Maps controversy, rightfully so. Has Apple really lost its innovative spark entirely? It's too early to tell.
Many are quick to attribute the company's perceived cooling period to the loss of its iconic leader, Steve Jobs, in 2011, but while the absence of Jobs' uncompromising leadership may indeed be a factor, there are other more significant variables at work.
Apple's reputation as an innovation powerhouse is a direct result of the series of category-reinventing products it introduced over the last 13 years. The first iPod, iPhone, and iPad each added to, refined, and popularized concepts that lead to lasting market-wide influence, and each represented previously uncharted territory for Apple. In the years that have followed, Apple has iteratively updated each with new features and capabilities, and even redesigned form factors. And like clockwork, each quarter the company has struggled to meet consumer demand and breaks sales and revenue records.
The issue, it seems, is not that its products are any less beloved by consumers or that it has failed to generate tons of cash. Quite the contrary. Instead, Apple is drawing criticism for failing to make a radical entry into a new product category. The ever-looming prospect of Apple's fabled HDTV could be the industry reshaping concept the company needs, but with no clear timeline in sight for its public debut, it may be months or even years away.
The categories Apple currently occupies are becoming increasingly competitive.
What's more, the categories Apple currently occupies are becoming increasingly competitive. Google's Android OS is more polished and feature-rich than ever, limiting fragmentation and besting the iPhone and iPad in several respects. Microsoft has made bold moves to make its PC and mobile products more stylish and UI-conscious with Windows 8 and Windows Phone 8. Hardware makers have also narrowed the gap, with rivals like Samsung, HTC, and Nokia building devices that use premium materials with a more solid construction and cutting-edge specs, like large pixel-dense displays and higher performance processors. And the gains from generation to generation become more substantial with each passing year.
Despite it all, Apple's products are still held in the highest esteem for quality, design, and cohesive user experience. And by all indications, it could very well continue with high praise from consumers and unprecedented profit. But Apple's iterative development strategy over the last few years may not sustain the company forever — or put ground between it and its competition. It's overdue for bold leaps in its existing product lines and the entry into a new one. With recent executive shakeups putting Jony Ive at the helm of both software and hardware and Apple's likely entry into the TV market, the return of a more innovative Apple may come sooner rather than later.
Indeed, Apple isn't failing — far from it — but it is facing tremendous pressure to innovate. And for the first time in years, the world isn't certain it can.
Scott Lowe is IGN's resident tech expert and Executive Editor of IGN Tech. You can follow him on Twitter at @ScottLowe and on MyIGN at Scott-IGN.
Source : ign[dot]com
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