Moving target: Apple's next move is more important than its last

The past weeks have seen an eruption of speculation about iPhone sales. The furor was sparked by reports from the Wall Street Journal and Nikkei citing unnamed sources who said that Apple had cut orders for iPhone 5 screens, possibly by as much as “half.” As a result, Apple detractors have begun their end-zone dancing prematurely (15-yard penalty), while Apple supporters have said, “Seriously with this?”

I’m obviously in the latter camp, but ultimately I think these groups are—to borrow a phrase from Steve Jobs, who borrowed it from Wayne Gretzky, who may have stolen it from a Zamboni driver—arguing over where the puck has been, not where it’s going.

While I’m somewhat interested in how many iPhones Apple sold in its first fiscal quarter and how many it expects to sell in its second, I’m more concerned about something else: what Apple’s next growth engine will be.

Sure, current sales figures matter. But if you’re an investor, you want to know what the company’s going to do, not what it has already done. Which makes deciding whether to invest in Apple something of an act of faith. Do you think that Apple’s current management doesn’t have what it takes to keep innovating?

Well, do you?

Punk?

The stasis quo

Apple’s detractors act as though the company’s product lineup will never change. That what you see being produced by Apple is the sum total of Apple’s innovation. That nothing the company can come up with will remake another market. That innovation at Apple died with Steve Jobs. It might sound like I’m setting up a straw man to toss on the bonfire, but you don’t have to go far to see that these attitudes aren’t just real—they’re pervasive.

I’ve said this repeatedly, in print, online, in podcasts, and while haranguing youngsters in front of the Gas-N-Sip: There seems to be a persistent myth that Apple churned out groundbreaking products every quarter under Jobs. In reality, it was three years between the iMac and the iPod, another six before the iPhone was released, and then three more prior to the iPad. The fact that Tim Cook’s Apple has not unveiled a new product category since the original iPad is not a colossal fail of epic proportions. In fact, you could argue that the fact that Apple is not rushing something out the door is a sign that it’s operating its business as usual. The company is releasing products on its own schedule, not at the whim of pundits or analysts. If you make that argument, someone will likely roll their eyes at you and call you a laughably biased Apple fanboy. But don’t worry about them. They’re the ones who can’t imagine there’s anything over the horizon.

Six years ago I remember hearing the same thing we hear today: All of the value has been sucked out of the markets that Apple currently competes in; competitors are going to take over; and Apple will once again be relegated to its destiny as a niche player. It had a nice run, but that was a fluke, and order will soon be restored to the universe.

In reality, Apple still controls the market for dedicated digital music players, and it ended up replacing its own hit product line (the iPod) with another (the iPhone). You can summarily decide that Apple will never ship another innovative product, but you should know that in doing so you are making the same mistake that people have been making about the company for years.

Innovate, rinse, repeat

Some observers are now suggesting that Apple needs to reinvent the iPhone in order to retain its innovation title. While I would never put it past Cupertino to blow up any of its existing product lines, I don’t think that’s where the real action is. We’ll know better after this quarter’s financial conference call, but unsourced rumors aside, the iPhone certainly seems to be selling just fine. Heck, Apple only caught up with demand for the iPhone 5 a month ago.

Meanwhile, there are many other product categories that the company hasn’t even attempted yet. The current speculation revolves around televisions, smart watches, or other wearable computing devices, and home automation. Knowing Apple, maybe it’ll be television watches that control your home.

“Are you getting it? These are not three separate devices!”

Or it’ll be something else entirely. I will not be so bold as to suggest what Apple should or should not get into next, from the above list or from any other product category. Other than one notable exception, I’m terrible at predicting things. (Yes, six years later, I’m still riding my correct prediction that “the iPhone will have just one button,” thank you very much. Even though, unlike Apple’s successes, mine really was a fluke.)

Before the iPhone came out, skeptics were telling us all the reasons why an iPhone was doomed to failure. Now they’re telling us why an Apple television or an Apple watch is doomed to failure. I have learned over the years that you disregard Apple’s ability to think around a problem at your peril; you believe rumors about the company at your own risk, as well.

Regardless, don’t worry too much about iPhone 5 sales. Apple’s destiny hinges not on what happened last quarter, but on what it has planned for the future.

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