x Abu Dhabi, UAESaturday 22 July 2017

Cook must rustle up new dishes for Apple

Popular as the iPhone may be, Apple's limited range of offerings could yet prove a handicap as the competition heats up. And the pressure is all on Tim Cook, the company's chief executive.

Tim Cook has done little to add to Apple's product line since replacing Steve Jobs as chief executive in August last year. David Paul Morris / Bloomberg News
Tim Cook has done little to add to Apple's product line since replacing Steve Jobs as chief executive in August last year. David Paul Morris / Bloomberg News

Despite the initial press euphoria over the iPhone 5, Apple's latest smartphone, the Silicon Valley jury is still out on Tim Cook, Apple's chief executive.

Since replacing the late Steve Jobs, the Apple co-founder, in August last year, Mr Cook has done little to add to the company's product range other than making incremental improvements to existing Jobs-inspired products such as the iPhone and the iPad, Apple's tablet computer.

"The fact that Apple is focused on so few products makes their strategy a high-stakes gamble. There is little room for miscalculations," says Tony Costa, an analyst at the international research company Forrester.

The question technology investors and analysts are now asking is whether Mr Cook will be able to deliver a show-stopping new product in the foreseeable future.

If he fails to achieve this, there are fears that Apple will start to haemorrhage market share to rivals such as Samsung and ZTE.

According to the research company IDC, China's ZTE shipped eight million smartphones in the second quarter of this year, a 300 per cent increase on the same time a year ago.

"Like Pavlov's dogs, buyers have been conditioned to lust for new Apple products and the linear improvement over the iPhone 4 … is enough to keep existing satisfied buyers in the fold," says Rob Enderle of the Enderle Group, an analyst based in Silicon Valley.

"The problem will be bringing across new buyers as this phone doesn't show well competitively against other phones that have recently been introduced.

"The display isn't as vibrant as the Amoled displays on competitive phones and is smaller. The device is very pretty but also relatively fragile."

Forrester believes the Finnish phonemaker Nokia's latest smartphone, the Lumia 920, which is expected to go on sale this year, will outclass the iPhone 5 in certain key areas. It will have better mapping and superior imaging with a built-in 8.7 megapixel camera using a Carl Zeiss lens together with revolutionary new features such as wireless charging.

Forrester predicts that phones such as the Lumia 920 and the soon-to-be launched Samsung Ativ S, which are powered by Microsoft's new Windows 8 operating system, will also lure new smartphone customers away from Apple.

Apple is also about to face a major challenge in the tablet market with Amazon's launch of two Kindle Fire tablets that drastically undercut the iPad tablet on price.

But the limitations of Apple's product range and the fact it has a one-product philosophy when it comes to smartphones may be a part of a deliberate strategy to try to retain its existing market share.

"The issue for Apple is that people don't like change, so more aggressively changing the phone might open them up to stronger competitive pressure than limiting the changes as they have," says Mr Enderle.

"One of the amazing things about Apple is the loyalty of its consumers," says Mr Costa. "Even if they stumble, their customers stick by them."

But according to Mr Enderle, that reveals a potential problem.

"This suggests they need a broader line, one line focused on innovation and the other focused on those that didn't like change to capture and hold a larger percentage of the market."

Such was the enthusiasm for the first incarnations of the iPhone that Apple felt it had the whip hand with telecommunications carriers. In many key markets, smartphones are generally sold as part of an overall package within which customers pay a monthly contract for the device and for services. Apple has been resistant to partner carriers to the same degree as its rivals and may find, in the future, the world's leading telecoms operators may start to favour manufacturers with more varied product lines.

It therefore looks as if it is only a matter of time before Apple is forced to expand its highly limited smartphone range.

"Few dominant vendors can sustain a one-size-fits-all model indefinitely and, clearly, even Apple had to eventually broaden the iPod lines and will soon extend the iPad lines. If they are to continue to stay at the top they likely will have to diversify the iPhone lines as well," says Mr Enderle.

There are, however, already rumblings in Silicon Valley that Mr Cook may have to do far more than simply diversify existing product lines if the brand is not to lose some of its lustre by the end of the year. Shareholders are now understood to be growing increasingly impatient to see Apple unveil the next show-stopper.

Some hope Apple will enter a new market such as TV with the launch of the long-anticipated iTV set, which would take Apple further into the content market.

Pressure from Apple investors and customers hungry for new evidence of Apple's ability to create innovative and industry-changing products is now mounting and Mr Cook may soon finally be forced to take a gamble on a new product line.