Apple and the innovator’s dilemma

I’m sure many of you would like to see Apple hit the ground with a wallop. This is what happens when you’re so big: there are the ones who love you (very much) and the ones who hate you (very much). I don’t wish harm on anybody, but I must recognize that I made an evil chuckle when Apple published their latest financial results and we saw that money losses can beat up anyone .

Obviously those numbers could be seen from different points of view. Apple supporters quickly jumped to step pointing out that in fact the problem wasn’t that they sold too few (of everything) last quarter: the problem was that they had sold too much (of everything) on the previous quarter. If one looked at the overall picture, things were in fact pretty good. Maybe the quarter had not been so bright, but my evil smirk was responded by Apple with a powerful infernal laugh:

cashpile

The vignette is funny and true, but the same webcomic would have been appropriate on other companies in the past. Companies that ended up being overtaken by those who did long-term thinking. Marco Arment wrote on Saturday his thoughts on the subject, and there he compared Apple to BlackBerry. He explained how BlackBerry smartphones were good on that moment because that was the concept we had about a smartphone. But they were wrong about the future, and like many others, they weren’t ready for what would happen after the iPhone’s launch:

No new initiative, change management, or acquisition in 2007 could’ve saved the BlackBerry. It was too late, and the gulf was too wide.

Today, Amazon, Facebook, and Google are Placing large bets on advanced AI, ubiquitous assistants, and voice interfaces, hoping That These Will Become the next thing That our devices are for.

If they’re right – and that’s a big “if” – I’m worried for Apple.

The analogy is clear for Arment: Google, Amazon and Facebook -I wonder why he doesn’t mention Microsoft here- are making great investments in cloud services and technologies really promising like Artificial Intelligence. Apple has hardly done anything about this. Some people commented in HackerNews that this was not entirely true and that the company has made some recent acquisitions (Emotient, VocalIQ, Perceptio), but this is just makeup, because whhat Apple has not could be probably more important:

Data.

Apple is a company that has never placed special emphasis on collecting data, and that could be a decisive factor for its future because data allows to feed those IA platforms. Can the IA dig the grave of Apple? Well, I would say that if there is a candidate technology to transform our lives, that’s AI. In fact, it will also have a huge impact -if everything goes as it seems- in other promising fields, including self-driving cars, of course.

It may be the case that Apple doesn’t need to invest in AI, or in those cloud services that remain untapped. It may be the case that Apple is just waiting: someone gets the next big thing in a rough way, and then they come, and then they pull off an enhanced version of it and they show it to us in a way that suddenly we recognize as the one we needed and then we all want to be part of that revolution. That happened with the iPod, of course. And it happened again with the iPhone.

It hasn’t happened again.

It may also be the case (too many ‘mays’) that Apple has not the resources to innovate in this area, and in this regard the solution would be relatively simple, of course: use their  checkbook. I don’t see them moving on that direction, but if someone has deep pockets, that’s Apple. A company whose most high-profile acquisition was Beats, a company for which they paid $3B and has allowed them to become a ‘me too’ in streaming services.

The bottom line is clear. Apple is doing really fine, but if you had to bet on a company that in 10 years had not only survive, but triumph, would it be Apple? I don’t think so, especially since Apple just seems to look short term. Others try to look beyond, and I like that. And this is the reason I think that sooner or later Apple will have a really big problem. Unless they wake up, of course.

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