Apple at Its Best

The history of Apple being doomed doesn’t necessarily repeat, but it does rhyme.

Take the latest installment, from Professor Mohanbir Sawhney at the Kellogg School of Management (one of my former professors, incidentally):

Have we reached peak phone? That is, does the new iPhone X represent a plateau for hardware innovation in the smartphone product category? I would argue that we are indeed standing on the summit of peak “phone as hardware”: While Apple’s newest iPhone offers some impressive hardware features, it does not represent the beginning of the next 10 years of the smartphone, as Apple claims… 

As we have seen, when the vector of differentiation shifts, market leaders tend to fall by the wayside. In the brave new world of AI, Google and Amazon have the clear edge over Apple. Consider Google’s Pixel 2 phone: Driven by AI-based technology, it offers unprecedented photo-enhancement features and deeper hardware-software integration, such as real-time language translation when used with Google’s special headphones…The shifting vector of differentiation to AI and agents does not bode well for Apple… 

Sheets of glass are simply no longer the most fertile ground for innovation. That means Apple urgently needs to shift its focus and investment to AI-driven technologies, as part of a broader effort to create the kind of ecosystem Amazon and Google are building quickly. However, Apple is falling behind in the AI race, as it remains a hardware company at its core and it has not embraced the open-source and collaborative approach that Google and Amazon are pioneering in AI.

It is an entirely reasonable argument, particularly that last line: I myself have argued that Apple needs to rethink its organizational structure in order to build more competitive services. If the last ten years have shown us anything, though, it is that discounting truly great hardware — and the sort of company necessary to deliver that — is the surest way to be right in theory and wrong in reality.

by Ben Thompson, Stratechery |  Read more:

Image: Apple