Apple's Continuous Improvement Process Rolls On

Scott Francis
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Apple’s iPhone 4 continues a trend they clearly established with the iPod line, and are continuing with the iPhone line:  yearly, substantial, incremental improvements in the device and platform. We’ve previously commented on both the process and the efficiency of Apple’s approach.  I found some of the commentary on the latest release pretty interesting, and likely it is just getting started, as most of us haven’t even held one of these devices yet, the closest we’ve come is that WWDC keynote… Forrester’s Charles Golvin says “While the iPhone 4 isn’t the leap forward that Apple paints it as, it is an exceptionally beautiful device and is a substantial upgrade that will succeed in maintaining Apple’s mind and market share growth.” I expect we’ll see a lot of commentary that amounts to a big yawn (for example, who cares if it has a gyroscope instead of in addition to an accelerometer).  I think this is largely because of the dribble of leaks mentioned below. On the other hand, Oppenheimer’s coverage (Yair Reiner):
Despite the “dribble of leaks” before Monday’s keynote, he said, Apple’s latest iPhone “catapults the smartphone category forward along every axis of relevance to consumers: OS sophistication, speed, battery life, display resolution, video connectivity and camera quality. If products like the HTC Incredible demonstrate that Apple’s competitors have significantly improved their game, the iPhone 4 suggests the stronger competition has sparked an almost fierce level of innovation at Apple.”
The dribble of leaks lessened the impact of the release.  But smartphone innovation is in its sweet spot right now, from my perspective.  It reminds me of the pace of change in laptops in the 90’s – every 12 months you could get a new laptop that made your old laptop look obsolete.  Smart phones are in a similar cycle.  I’m not sure it will continue for more than a few years at this pace – but when it does, Apple has previously shown it knows how to diversify its product line while keeping it simple: color, storage, form factor.  It has done this with the iPod lineup.  I haven’t felt a need to upgrade my iPod for years – but for a few years I would have wanted a new one about every other year. Apple is doing a good job of not just innovating (or catching up) on the device (display, CPU, cameras, etc), but also on the ecosystem.  It is analogous to the same plays it made in the iPod line, though obviously the smart phone market and ecosystem is more complex than the iPod ecosystem. The key thing, however, is that Apple is busy making a steady stream of improvements that make their products a more and more attractive value proposition.  And they’re raking in profits that will enable them to keep investing in R&D on those products that will be hard for competitors to match if they can’t produce similar profits. Some would point out that other phones (Android in particular) will add more features than the iPhone, especially inbetween the iPhone product cycle releases each year.  However, I’d remind the critics that in the MP3 player market, there was one feature that many of Apple’s competitors had, but which Apple never replicated – and Apple *still* has 70% of the market at a higher price point.  What is it?  FM stereo tuning.  It turns out, the ecosystem is more important than FM.