The world awaits: iPhone X release will be on November 3rd. That is the day the “next big thing” will land. In its peerless marketing brilliance, Apple has been running this rendezvous for years. It makes great products that turn customers into fans.
But it seems this time may be different. Apple will be the first to unveil and introduce a key mobile product feature, over perfecting what someone else has done before. The front-facing 3-D sensor in iPhone X is industry-leading at this level. It is also turning out to be a challenge, Bloomberg notes.
You can read all about this in our story, but the implication is that tech companies are bumping up against an innovation ceiling in smartphones. Chief Executive Officer Tim Cook often says Apple doesn’t aim to be first with a new product, but aims to be the best. In the iPhone X, though, the front-facing 3-D sensor really was a first. Was it worth the supply-chain agony to win bragging rights for this feature?
The 3D sensor system enables compelling features like Face ID authentication and Animoji to work. That sensor powers facial recognition technology which is a very critical element of the iPhone X. So, it will be very bad if Apple is having problems with this component, even in supply chain. The company is known for its excellent supply chain engineering and a broken one will be devastating.
Becoming the First
Apple over the years has been the first in great profits, revenues, and app-excellence. But in introducing major new (first) features in mobile devices, it does not even try. As noted above, the CEO made it clear, using Bloomberg Businessweek’s own description that “Apple doesn’t aim to be first with a new product, but aims to be the best”. So going for the first in the 3D which is yet to mature is a big risk for a company that has a reputation of being the best, by waiting for a specific technology to mature before adoption. Of course, many have accused Apple of not innovating enough with the copy-and-perfect model that has worked for it for years. It wanted to use the 3-D feature to silence them.
The good news is that Apple will fix its problems and will ship the usual millions of units over the next few quarters. But shipping phones may not necessarily be the whole truth. As Apple differentiates with hardware which runs proprietary software, it will face more challenges as the data race enters a major phase.
Amazon is an ecosystem for reviews with Facebook providing the social feedback element and SnapChat offering instant perspective. Along with Instagram, these ecosystems will be shaping the next phases of web-based commerce. As they mature and become more integrated, the elemental value which makes hardware important, will begin to fade in the eyes of customers.
China’s WeChat has already abstracted the value of mobile hardware. WeChat is the Internet operating system in China. I do think that a U.S. based web business will finally provide a U.S. equivalent, despite possible regulations. Facebook with its Messenger and Instagram is the most likely company to do that.
WeChat is the Internet first operating system which practically does everything: WhatsApp, Facebook, Twitter, Instagram, all in one. It is a seed that will keep growing, and breaking it will have minimal impacts, unless you want another name, not WeChat, to do the same thing tomorrow in China.
This abstraction is the main reason why Apple has struggled in China. And if that trend makes it into U.S., Apple will find itself in trouble. As Samsung Galaxy evolves and Google Pixel advances, iPhone has no margin for error because that is the only product Apple makes that brings huge profits. So any vulnerability to iPhone will unravel the Apple machine. Yes, it may make sense for Apple to just forget about going to be the first, focusing on what has been working for it: copy and perfect what others have done.
The Fortune List
Fortune and BCG’s Henderson Institute published the The Future 50 – great companies of the future.
The list is based on a screen of 2,300 publicly traded companies, which were scored based on two equally-weighted measures: First, a calculation of the market’s estimate of the company’s future potential (the proportion of its market value not attributable to current earnings and dividends); and second, a calculation of the company’s capacity for long-term growth, based on 14 factors that BCG found correlated with long-term performance. You can read more about the methodology, which included an AI scan of 70,000 10-K reports, here.
The top ten big companies (market value over $20 billion) on The Future 50 are:
- Intuitive Surgical
- Edward Lifesciences
- Activision Blizzard
- Regeneron Pharmaceuticals
The others are here. It includes Alphabet and Amazon… but not Apple. That is indeed strange, you may think, for not having Apple. But that is not an error – Apple is the most imperiled company in the big league now. As phones mature, the edge will erode. So, the future is not really assured.
The central theme of Apple innovation is to perfect and make the best of whatever that is out there. But in 3D sensor, it wanted to become the pacesetter, creating the first to be used in the phone with facial recognition and other features. Because iPhone is the key Apple products, the margin for error is low. Its competitors have better positioning: Samsung can have Galaxy blowing up and will still generate huge profits from its semiconductor business while Google Pixel revenue will remain insignificant to Google Search for years. Apple under the pressure that it never innovates, as first in feature, was pushed to become first. But right now, it seems the company may need a new learning as it is struggling to deal with issues relating with 3D sensor. It could be ironic because others will now learn from Apple mistakes, to unveil in the near future, 3D sensors that work, even better than Apple’s. That is not the type of comparison that Apple will want.
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