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Desperately Seeking Innovation

By Erika Morphy MacNewsWorld ECT News Network
Aug 7, 2013 5:00 AM PT

Apple may have won the battle, but it is in danger of losing the war. The battle was last Saturday's veto by the Obama administration of the International Trade Commission's decision to ban certain Apple products that it found to have infringed Samsung's patents. As for the war, that would be Apple's long struggle to preserve its reputation for delivering startling innovation.

Desperately Seeking Innovation

Let me be clear about a few points first: Patents in the mobile space are a multibillion dollar asset class, and Apple would be doing a disservice to its shareholders if it did not protect its IP. In addition, the way the ITC case unfolded is as much about the issue of the potential abuse of FRAND patents as it is about Apple's patents specifically.

All that said, the overturn is symbolic of an image that Apple has been unable to shake: The company is clinging to its previous designs and developments because it is unable to come up with another game-changer like it did with the iPhone and the iPad.

Just 1 Word: Plastic

A quick look at a few Apple-related news items of the past several days reinforces this perception:

CEO Tim Cook recently made another visit to China Mobile, raising speculation that Apple will soon be inking -- at long last -- a deal with the telecom provider for... an existing device.

Not that the iPhone is stagnant. Apple watchers were also treated to another round of the game, 'What will the next iPhone have?' The latest best guesses include a plastic version of... an existing device.

Apple shareholders should not fear: Marry those two developments and here's what you get: a plastic device that can be marketed to China Mobile's immense user base. Revenues will spike, shareholders will be happy -- all of which is good -- but the end result will be Apple sinking deeper into complacency.

Tablets, Share Prices

Trends are similarly discouraging in the tablet space, where Apple recently lost some significant ground. Its share of the market declined to 32.4 percent in this latest quarter, from 60.3 percent a year-ago, according to IDC. Apple is still the lead vendor, but there are now other serious players. Samsung, Asus, Lenovo and Acer are all making inroads.

How does Apple plan to respond? It reportedly will debut a refreshed iPad and iPad mini, with the mini sporting a Retina screen. Possibly.

Then there is the matter of Apple's share price. On Tuesday, Apple stock was trading at US$465 per share. Although the company's share price has risen roughly 10 percent in the last month, it's still down 15 percent year over year. To keep Apple's employees happy, the stock should be around $705 per share, Global Equities Research estimated. If it doesn't reach that level soon, Apple will begin to lose valuable talent to Google suggested a recent research note.

It is easy to point to the obvious: When Steve Jobs passed, so the theory goes, he took the best of Apple with him. There may be something to that -- but it is equally obvious that his discipline, his pursuit of excellence, and his commitment to the customer experience left an indelible mark on Apple.

Where Is That Crazy Genius Impulse?

What's missing is that crazy, genius impulse -- the one that drives someone to take a creative leap and develop a product that is so different -- yet so intuitively obvious -- that people immediately know they must have it to live a happy life. That happened more than a decade ago, with the synergistic rollout of the iPod and iTunes, and it was followed by the creation of the iPhone and iPad.

Maybe the problem is that Apple has run out of game-changing devices to build -- but that theory doesn't make sense. Over the years, ideas have been floated -- an Apple TV, an iWatch, an iRemote -- all of which offer valid possibilities and could be disruptive to their respective industries.

Perhaps the problem is that Apple has become too large and too institutionalized -- has moved too far away from its scrappy revolutionary roots to build anything startling and unique. That happened to Microsoft more than a generation ago and arguably may be happening to Google right now.

Yet a case can be made for the notion that big equals innovation. Amazon continues to deliver innovative products and services on a regular basis, for example. The recent news that CEO Jeff Bezos is acquiring The Washington Post suggests that there is plenty more of that in the works.

I am left with one last image -- one that resonates the most for me, given Apple's track record, its history and the fact that Steve Jobs' DNA is still embedded deep throughout the company. That image is J.K. Rowling -- yes, the author of the Harry Potter series.

Rowling has gone on to write other books. She adopted the pseudonym "Robert Galbraith" until she got outed by the Sunday Times.

This is what she said when confronted with the rumor: "I had hoped to keep this secret a little longer, because being Robert Galbraith has been such a liberating experience. It has been wonderful to publish without hype or expectation, and pure pleasure to get feedback under a different name."

Maybe Apple is too weighed down with being Apple and having to meet all the accompanying expectations. Maybe the company needs to flounder and fail -- perhaps even really fail -- before it will free enough to resume its crazy, genius, brilliant innovating.

Erika Morphy has been writing about technology, finance and business issues for more than 20 years. She lives in Silver Spring, Md.

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