Can Apple Reinvent Itself Again?

On Friday, April 1, 2016, Apple celebrates its 40th anniversary. I have had the opportunity to professionally follow Apple since 1981. When I first began interacting with the company, it was a very small firm whose Apple II personal computer had gained traction with hobbyists and some schools and was just starting to leverage a software product called VisiCalc to push this computer to business users as well. At that time, most of my dealings were with Jobs and Wozniak and their small media department.

Of course over the years as Apple grew, especially after the Mac was introduced and it was marketed to the business world as part of a desktop publish solution, Apple’s place in the market became larger and the company really took off. Since then, I have had the opportunity to interact with all of their top management and have developed a pretty good understanding of their culture, how they work and what really makes them tick.

I am often asked what makes Apple successful and if they can continue that success in the future. To answer these questions, I believe one has to understand Apple’s past in order to predict its future.

The first characteristic that has made Apple successful was the visionary mind of Steve Jobs. His early vision drove Apple’s success up until he left the company in 1985. But, as history records, Steve’s management skills were sorely lacking in those days. However, as early as 1977, with the introduction of the Apple I, he set in motion one of the major tenets of Apple success. The concept of reinvention.

As you know, Apple did not invent the personal computer. That distinction lies with the late Eddie Roberts and his Altair Computer in 1974. This is the personal computer Bill Gates and Paul Allen wrote an OS for and set in motion the personal computing revolution.

Steve Wozniak was very intrigued by the Altair but did not have the money to buy one. So, in the 1975-1976 time frame, Woz created his own version of the Altair PC and tapped his friend Steve Jobs to help sell it. The result of this was Apple creating the first commercially successful PC to help kick start the PC market.

However, in 1981, IBM came to market with the original IBM PC and since IBM was a known quantity in the business world, it began to gain success and pushed the Apple II out of the limelight. This is when Steve Jobs’ “reinvention” gene kicked in again. He decided Apple needed to reinvent the PC by creating one that would be even better than what IBM had on the market. He and his team created the Mac and introduced the first graphical user interface and mouse for commercial use in a PC. Even here he was reinventing things. Both the GUI and mouse were invented inside Xerox Parc, but Jobs made it better and commercialized it with the Mac.

That idea of reinventing products was kept alive even when Jobs left the company in 1985. While Jobs made a key decision to create their own laser printer, It was John Sculley and his team that married Pagemaker to the Mac and birthed desktop publishing. Electronic publishing was not new by any means back then, but Apple reinvented it at a desktop level.

Sculley also made the major decision to put CD-Roms in all Macs and, because of this, Apple was able to use software to integrate text and media into a PC and birthed multimedia computing. Again, digital multimedia had been around for some time but Apple reinvented it in a desktop PC package.

From the latter period of Sculley’s role at Apple and until 1997, Apple fell into disarray. Much of that came from Apple losing its vision and reinvention philosophy. Their CEOs started to copy the PCs in the market in order to try and compete with them. They even allowed for a clone of the Mac and, to me, Apple lost not only its vision but its soul during that period.

But when Jobs came back in 1997, he put them back on a path of reinvention. He started with reinventing the Mac by introducing the candy-colored all-in-one iMacs. Although Apple did not invent the MP3 player, Apple did reinvent it in the form of the iPod. And Apple did not invent the smartphone, but they reinvented it in the iPhone. And tablets had been on the market for 20 years when Apple reinvented it with the iPad in 2010 and made it one of the most disruptive products we have seen in many years.

I see this principle of reinvention as a key part of Apple’s DNA. They tend to wait and see if a technology is valid and then come in with something better, tied to their ecosystem, and apply many forms of innovation to their version. Apple has not entered VR/AR yet but I suspect they will wait to see where the sweet part of this market is and then do a product better than what is on the market now.

There are rumors Apple is creating a car. I am not sure if a physical car is in the works but I have no doubt they are looking at how to reinvent the automobile experience and tie it to their ecosystem. We also know Steve Jobs gave Tim Cook a goal to find ways to reinvent the healthcare system. Apple is on track to make major contributions to the future of the health care processes and impact the interaction between health care providers and patients in new ways that will ultimately change healthcare for the better.

Apple seems content to not being the first one to market with a new technology but instead, let the market develop to a point and then enter with a product well designed, well thought out and connects to their apps and services.

Another key tenet of their strategy is based on innovation and design. I met with Steve Jobs on the second day he came back in 1997 and asked how he was going to save the company. Apple was $1 billion in the red and in serious trouble. He told me he would focus on taking care of his core customers, ones that used the Mac for graphics, engineering and design. But he also told me he would focus on industrial design. At the time, I thought he was crazy but, sure enough, industrial design has been key to Apple’s success. That, along with creating apps and services that pay great attention to detail and Apple has lived by these tenets to help make them one of the most valuable companies in the world.

The other part of the equation of Apple’s success has been its steadfast leadership who learned Jobs’ vision in person and have been chartered to drive Apple forward by preserving its culture, commitment to innovation and the quest to make Apple great at everything they do. Make no mistake about it, Apple is Steve Jobs’ company and this management team will do everything possible to drive his vision forward and keep his legacy alive.

So how does this help forecast Apple’s future? For one thing, Apple still has a lot to prove in their quest to honor and drive Steve’s Jobs’ vision and legacy into the future. And Apple is not done innovating and reinventing by any means. Also, any hardware they create, regardless of what that is, will be tied to an ecosystem of apps and services that can only grow and get better over time. But I wouldn’t call Apple’s strategy formulaic, since they often deviate and continue to bring new ideas and technology to their products and ecosystem. However, they live by the tenets I shared above and these seem to be the guiding principles for how they think about and create products and services.

When I hear Apple’s best days are behind them I just look at their history and, from what I know of this company, I factor that into looking at their future. That is why I have no doubt Apple will reinvent products, and itself, and continue to be a powerhouse in technology for decades to come.

Published by

Tim Bajarin

Tim Bajarin is the President of Creative Strategies, Inc. He is recognized as one of the leading industry consultants, analysts and futurists covering the field of personal computers and consumer technology. Mr. Bajarin has been with Creative Strategies since 1981 and has served as a consultant to most of the leading hardware and software vendors in the industry including IBM, Apple, Xerox, Compaq, Dell, AT&T, Microsoft, Polaroid, Lotus, Epson, Toshiba and numerous others.

1,257 thoughts on “Can Apple Reinvent Itself Again?”

  1. Tim,

    When we look at the FANG stocks we can feel and see the innovation coming from each of them almost on a quarterly basis. Examples – Amazon drones, 2 hr delivery; Alphabet autonomous cars, Nest; NetFlix international movies, Emmy Awards; FaceBook WhatsApp, tweaked news feeds. (none of these are grandly innovative, but they’re powerful innovations that move the needle (or not if they fail).

    For Apple, its innovation clock audibly chimes only every 3 or 4 years. No one sees it happening now. But the Apple faithful ‘know’ innovation is alive inside, but very secretly.

    The paradox is apparent. Apple has innovated whole industries – PCs, music players, smartphones, and tablets and yet, it’s now seen as lacking innovation, just being derivative even as it ships a truly peerless smartwatch as timepiece health and fitness hub nonpareil, and the soon to be launched A10X with enough power to drive a ‘Mac’ laptop.

    It seems Wall St sees Apple as derivative because its innovation is only recognized when revenues pass $30B.

    Is this a job for Tim Cook to handle? Let the world know innovation is alive and well. Admittedly doing it effectively while keeping secrets is a challenge, but I think it’s an important challenge and being unmet, it is keeping Apple’s stock pinned to an incredibly low earnings multiple.

    1. “Let the world know innovation is alive and well.”

      In the past 40 years, Apple has grown from two kids tinkering in a garage to the largest tech company on the planet.

      For long term investors, Apple has been a gold mine, and will likely continue to be that way in the future.

      For gamblers and day traders Apple has never paid off, because of the volatility caused by “analysts” and financial managers giving bad advice (often to influence the stock price to their own advantage).

      There will always be a certain number of people who disregard all of Apple’s incredible innovations and advancements, and who complain that Apple doesn’t re-invent the wheel every day. There is no convincing people like that, and it really isn’t worth the effort trying.

      For those of us who do see and appreciate Apple’s progression of successes, and notice not just the major new products, but also the incremental changes that lead to better things, it is unnecessary to try to “teach” others (and that is often a futile experience best avoided).

      You either have the awareness and patience to recognize the long road of progress that Apple is on, or you don’t.

    2. While my partners and I did not have the opportunity to meet Mr. Jobs and visit Apple much like Mr. Bajarin. We did however invest quite heavily in the company in the late, late 90’s. We did not invest because of a new product, the iPod, we invested because of changes that were being implemented for the long term, innovation in management style, innovation in corporate operations, innovation in product development process, innovation is supply chain management….

      The things we thought were important reasons for an extreme bet was things that were changing internally that could possibly carry the company forward, things that defied ‘conventional wisdom’.

      That investment changed our lives forever; my partners went on to pursue their interests, I pursued green architecture development projects.

      Innovation is not necessarily what you see, it’s what it can possibly change for the future…

      1. It’s a curious thing. A lot of both professional and aspirational analysts’ verdicts on Apple can be summed up to ‘Well, as hard as I try to conjure it up, I really have no idea what Apple can do next that would blow my mind, so my conclusion is that they actually don’t have anything anymore.” Somehow their failure of imagination implies failure at Apple.

        First of all, if you can conceive of what Apple will do next, then it wouldn’t really be mind-blowing, would it?

        Secondly, if you’re so good that you have Apple-like technological prescience, than you probably would be working for Apple (or some wannabe), not sitting before your keyboard spewing out self-contradictory blather.

  2. Good article, Tim.

    I don’t know if Apple will continue to have success, but I do know that the reasons currently being given for why they will fail, are, for the most part, without substance and ofttimes downright foolish.

    Two years ago, the drumbeat was that Apple was too late for watches. Two years, and 4 billion dollars later, the drumbeat is that the Apple Watch is not the iPhone. Sigh. True enough.

    Nothing is the iPhone. It’s one of the biggest deals in the history of tech. Perhaps in the history of mankind. It’s predicted that by 2020, 80% of the world’s population, or 6 billion people, will own a smartphone. Never before in history — not by the phone, the train, the steamboat, etc., — have so many people been touched by technology. And Apple started that revolution only 8 short years ago. I think it still has a little more time to run. 🙂

    Today the drumbeat is that Apple has “missed” VR. Really? Apple can’t catch the VR train? My guess is, they are not trying to catch the train. They’re patiently standing at the next station, waiting for the VR Train to pull in, so they can get on.

    1. “Today the drumbeat is that Apple has “missed” VR.”

      Yeah, like they totally missed the tablet computer train that Microsoft got onto in the early 90’s. It’s more like they’re waiting for that particular train track to become a little bit more than a bunch of surveyor’s spraypaint on the ground and a demo diorama in some salesperson’s office.

      1. I’ve read some articles about Oculus Rift’s reviews and they were not favorable. It seems the consensus is ”too early, not enough appeal except for hard core gamers, and a niche product”

        If Apple missed anything with VR, it’s the panned reviews.

      2. I think VR is being overhyped about as much as 3DTV was. The question that needs to be asked (which for example weren’t asked sufficiently of 3DTV, Google Glass, and Segway) is how well does the use pattern envisioned for the product fit in with people’s normal patterns of social interaction with respect to the function that said product addresses.

  3. Nice overview. I agree that Apple could transform the healthcare industry – taking its experience from iPhone and Apple Watch but also emphasizing consumer privacy via its stance on encryption. If wearables have a record of your health – you are going to need some comfort that that information remain yours and is secure. Apple’s attitude to consumer data and security sets it apart from other players – with implications for consumer, health, finance ecommerce and payments.

  4. Having used Apple products since the 1970s (and having owned a NeXT computer), there is a consistent quality in Steve Jobs’ inventions that course throughout Apple’s history: a refined user experience. I owned MP3 players since the mid 1990s, but it was only the iPod that transformed them into all-purpose digital music players. Jobs took all the potential positives of digital players and realized them in ways no one else before had done. It’s like Jobs looked at the platform and what others were trying to do with it, and then reinvented it in ways that transformed it.

    He did this over and over again, with the goal alway being intuitive simplicity for the user. And yes, industrial design is a key part of this. Jony Ives recounts his first experience with a Mac, it’s beautiful simplicity and power, and said, yes, I get it, I know what Jobs is trying to do here. From this we get one of the most fruitful partnerships in the history of technology and commerce.

    Ditto with the tablet computer. Again and again Jobs looks at a platform, an idea, and distills it to its essence. He then drives the physical realization of this vision, he drives and drives, until its realized. I was using Microsoft Windows tablets a decade before the iPad, but it was half-baked in comparison to the iPad. Jobs would have never permitted a Windows tablet to be released in the state that Bill Gates produced his tablet computer, it would have been unacceptable.

    This is Apple’s secret to its success, to its innovation.

  5. I totally agree that Apple is very good a reinventing things, and it is a word that they often use in their product announcements. However, given that they virtually own all the profits in the mobile handset industry and a large proportion of the profits in the PC industry, one recent question is whether or not reinvention is enough to grow the company in the coming years.

    Whereas Apple’s “reinvention” has up till now focused on tech (productivity and digital entertainment), the new challenge is for it to reinvent non-tech markets, infiltrating these with tech in the process. These new markets must be outside of productivity and digital entertainment because humans simply don’t spend huge proportions of money on tech-related products (we spend much more money on housing, health, etc).

    So yes, Apple’s strength has been reinvention. However, whether or not reinvention alone be enough to “reinvent Apple” (and carry it on to the next decades) is questionable. Apple has to work harder to move outside the tech world this time, because it has already gobbled up most of the hardware profits in tech and can’t grow much further.

    1. “These new markets must be outside of productivity and digital entertainment because humans simply don’t spend huge proportions of money on tech-related products (we spend much more money on housing, health, etc).”

      I believe there’s something about Steve Jobs giving Tim Cook the go ahead, mandate to do something big with health. It appears they are starting…

    2. “Apple has to work harder to move outside the tech world this time”

      Not necessarily. As any business person knows it’s a lot easier to sell new things to existing customers. Apple’s focus on user experience is a good fit for a lot of different services and products that currently do a piss poor job on the user experience front. Asymco has a good recent article “The Next 40” that makes the point that Apple is a “customer creator”, and Apple will soon have a billion customers. That’s a lot of people to sell new things to.

      1. This totally depends on the growth rate that you are targeting. Google, Amazon enjoy consistent double digit growth. With a target CAGR of 10%, you’ll have to double your business in 7 years.

        We know Google still has a very small percentage of total ad spend. Likewise Amazon has a very small percentage of total retail. It is easy to imagine them doubling their current business.

        Not so for Apple. It’s hard to see how they could sell double the number of iPhones at the current profit levels. iPhone owners are already spending >1,000USD annually for the combination of their phone and data fees. Asking them to double their expenditure on productivity, communication and entertainment is a bit too much. Likewise, to double through expanding their user base in China and India requires unimaginable economic growth in these countries.

        I agree that it’s easier to monetise existing customers. My point is that a typical household can only spend so much on tech (productivity, communication and digital entertainment). Hardware-wise, Apple already has most of the profits it’ll ever get from this segment. It has to move into others.

        1. Apple is moving to capture spending outside of tech with media/content and financing. That’s still iPhone-dependent, but that’s not quite the same.
          Also, I’m convinced healthcare (the real thing, not activity trackers) is a long-term play. It has both volume and margins, and high barriers to entry.

          1. Apple is already in media/content, as is Amazon and the rest of the bunch. However, by Apple standards, it’s not really a big enough business.

        2. My apologies if I wasn’t clear. When I said it is easier to sell new things to existing customers I meant Apple’s expansion into new segments. Apple’s focus on delivering a specific kind of value within the user experience is what will allow them to expand into new areas.

  6. “There are rumors Apple is creating a car. I am not sure if a physical car is in the works but I have no doubt they are looking at how to reinvent the automobile experience and tie it to their ecosystem. ”

    Why not? The auto industry is 100+ years old, but there have been many new entrants. Japanese manufacturers, VW, Korean mfrs, and China which is now the largest producer of cars…

    1. Why make a physical car if you can put a phone in the car, which will be at the heart of your driving experience? The main selling point for my 2013 Toyota Camry SE was an ease of integration with a smartphone. I get into the car – my musical collection starts playing on a bluetooth speaker, I turn the ignition off – the music stops playing, I turn it on again – the music continues from where I left off. Love it. Will buy Camry again in 2 years. The only thing, which is missing is a back-off camera…

        1. There’s also a huge opportunity to build a better car. Modern cars are not that well built or well designed.

          1. I don’t agree. Cars last longer, go further without maintenance, do more, are safer to drive at higher speeds.

            Maybe you refer to well built and design as aesthetic?

          2. There has been progress in some areas, yes, but having rebuilt engines and worked on numerous cars, trucks, heavy machinery over the years, I can tell you there’s still a lot of piss poor build quality in a lot of areas. Modern cars are mediocre at best, there’s a lot of room for improvement.

          3. I think you meant to reply to someone else, your comment makes no sense as a reply to my comment about the build quality of modern cars.

          4. No it was directed to you. Cars, computers, speeds and feeds, how it works, “most people” don’t care about that. You use that argument frequently. The consequence of “most people” not caring is the degradation of product.

          5. Once again your anger at Apple has clouded your vision. You’ve completely misunderstood the point. Maybe take a breath and try to make sense next time, rather than going for cheap shots and jokes.

          6. My vision is crystal clear and cuts both ways, your’s is clouded by admiration…
            Cheap shot? Maybe, but fair. No apologies.

      1. Billions upon billions of dollars. Finance charges, selling certified pre owned, favorable rate and terms for seller of cars, service agreements, and many more.

        There’s so many ways to make money in the auto industry.

        1. Jobs would not touch anything with profit margins less than 40% and the profit margins at auto and truck manufacturers are 18% in 4Q 2015. I’d hate to say that, but one way to capitalize on a phone integration would be to charge license fees – that would be not too Apple-sque, but more Microsofty. But there is a ton information on driving habits to be collected for Apple Health…

          1. Why would you assume Apple’s margins on a car would be the same as the industry average?

          2. Because people do not have enough money in general? Cars are big ticket items, so higher prices will have a higher societal impact. Knowing how Apple would like to test different tints on a windshield I am also not sure there are enough garages in a new Spaceship campus!

          3. People have plenty of money… This is the time of the rise of the new middle class and wealth creation around the world that has never been experienced.

            Also, acquiring money has never been cheaper and easier. Now, the cost of funds is less than what can be earned… OPM is at a all time high.

            Cars are not big ticket items, they are amortized to death and are offered at such favorable terms and rates allowing many people sweet purchasing advantages.

            Luxury vehicles, large SUV, and pickup trucks purchases are subsidized through incredible allowable depreciation schedules.

            People have money and the auto industry has so many tools to get you into a car that you desire. No income or job required.

          4. “Now, the cost of funds is less than what can be earned…” Run with it. I’d like to take a walk. My main use of a car nowadays is to explore the life of the animals in their natural habitat and take some pictures for my diary.

          5. Run with what? Is this your attempt at being something? Maybe you don’t know what to argue for, so you pick a phrase that seem so randomly selected and make an arbitrary statement to demonstrate nothing…

            You’re arguing because you have nothing else to do.

          6. “You’re arguing because you have nothing else to do.” I. am. Doing. Something. And some people even need it.

          7. As longboard points out, cars are typically a reasonable monthly payment these days, almost like mini-mortgages. There’s also the distinct possibility that Apple will improve manufacturing significantly, which will naturally increase margins. Keep in mind that an electric car with improved range and some kind of solar charging station built into an attractive monthly price actually gives you a total cost of owning/operating that is much lower than a traditional vehicle. When you think about what Apple may or may not do, you have to think in terms of five to ten years out. Many analysts made this mistake with the iPhone, for example, thinking only of what it was in 2007 instead of understanding what it would become in five to ten years.

          8. It is also a question of space. I am sure electrical cars are the future, but for example Tesla announced that it built more charging stations in Manhattan than gas stations. Which would not be not hard to do because it is exactly 1 (one) gas station in Manhattan due to the cost of a real estate there. For the moment most of Tesla customers are in the cities where the cost of a real estate is high. So there may be some social implications. For example temporary gas shortages in France in 90s led to that a favorite gas-guzzling model of that time M.Antoinette was made lights-out and there was even a slight social unrest.

          9. “…because it is exactly 1 (one) gas station in Manhattan due to the cost of a real estate there.”

            There are about 39 gas stations, down from about 60 from 10 years ago. The reason for less: it is more profitable to develop, lease, or sell the land than to sell gasoline. Corner gas stations have been sold for between $20 million to $25 million. The trend will continue.

            Charging units do not require large amount of land, or underground infrastructure, or special permits and brownfield insurance. They are also less expensive to build out. The units cost about $500 plus installation fees. The garages love Tesla, since tesla also pays a recurring fee to have a unit in place.

            The charging units are put into parking garages, hotel parking structures, restaurant parking lots, and in underground parking structures of apartment buildings. Tesla has sold approximately 1500 cars to Manhattan residents. There are about 200,000 cars on the island. Only about 25% of the residents own a car. Car ownership reduced every year.

            So, in reality, cars are not the preferred method of transportation. There are over 13,000 uber drivers in Manhattan along with about 13,000 taxis all fighting in line to refuel at the dwindling gas stations.

            If it’s a question of space, then car ownership is not the answer in Manhattan. And if electric cars are the future, it’s going to take a very long time for the future to arrive. I am sure it will not be here in your lifetime. There are over 1 billion cars and about 75 million new cars are sold world wide. Along with cars staying on the road for over 11 years. Doing the replacement math tells a story that electric cars becoming the future is a very long time from now.

            However, it can all change. Since the biggest roadblock is not demand, but production capacity.

          10. And phones were even smaller, same with music, same with movies, same with hardware… and many more that many companies venture into.

            But, you must know Steve very well. So why bother; turn off the lights and close the doors.

  7. I’m not sure Apple needs to reinvent itself again, I’m not sure it did except when S. Jobs came back. It just needs to find a languishing market were its “easy + sexy, then lock-in” formula will work. Consumer IT was the low-hanging fruit, but I’m sure there are other markets that are under-developed and under-monetized because they are under-branded, under-IT’ed, overly complicated; and with ecosystem/network/lock-in effects.

  8. Cook has done a stellar job running Apple since Jobs tenure. The iPhone was ushered in a new era for technology that’s likely not to be repeated for some time. We should also remember that Cook did this during and after the worst financial crisis in recent history only to be followed by the most inept presidency in our lifetimes. All things considered he has done well.

    Turds like Barajin write these banal articles that say very little about the essence of (in this case) Apple and it’s deep engineering and design talent. Apple will continue to surprise.

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