Apple’s Inevitable Demise

Apple has done it again. They have set yet another record for sales of the new iPad, and have captured the hearts and minds of many an Apple fanboy. I myself have bought a new iPad, and I must say it is pretty great. However, diving under the surface, we can see that cracks are beginning to show.

The whole thing started in October, when the iPhone 4S was released. While it was a pretty good upgrade, the updates were marginal: faster, a better camera, and the almost-useless virtual assistant Siri. Yes, the updates made the phone better, but were they really that amazing? I own an iPhone 4, and comparisons to the 4S yield negligible results. Despite this, sales were enormous. Now fast forward to March 2012, when Apple announced the new iPad. Once again, marginal improvements: faster, better camera, LTE (which isn’t necessary), and a higher resolution display. Those were the benefits, but there were even some drawbacks–the new iPad was slightly thicker and heavier than its previous generation. While sales have been massive, there is room for doubt concerning Apple’s ability to consistently amaze. Great, there have been two sub-par product releases in a row, but why does all of this spell doom for Apple?

Apple has set itself upon a fragile but extremely profitable platform of consistent innovation, secrecy, flashy releases, and consumer excitement. Apple develops a product, keeping it an utter secret until its unveiling. This generates enormous amounts of excitement from consumers, who speculate endlessly about what the product might have. Once Apple sends invitations for the unveiling, anticipation grows at an exponential rate, with millions of people anxiously waiting for information. The announcement of the new product adds to the energy even more, rocketing levels into the sky. All of the pent up enthusiasm is released at once when the product goes on sale. This system allows Apple to generate huge amounts of profit in bursts. In addition, this drives the expectation even higher for the next product because consumers expect consistent quality. While this system is extremely profitable, steadily increasing expectations will eventually pass ahead of Apple’s innovation ability. This will cause Apple to stall, and badly. If one of Apple’s product releases is below expectations, Excitement before the product goes on sale goes crashing down, which destroys sales. In addition, consumers will be less excited for future products, which will drastically reduce profits for other new products. In addition, competitors can seize the moment and develop better products that capitalize on the weaknesses of Apple’s latest product.

I am not saying that Apple is going to destroy itself tomorrow, but expect larger issues to arise in the next four years. For now Apple has tremendous momentum because of Steve Job’s reality distortion field. He could make even the most unsatisfactory releases seem revolutionary–as seen with products such as the iPhone 3GS. While products are receiving minor upgrades, competitors are increasing their products’ specs and features by leaps and bounds. Yes, the new iPad is far superior to its competitors, but Apple has to develop it at a faster rate than its rivals, something it is not doing right now. Apple does have the early bird advantage, but soon could be overtaken. Don’t get me wrong–I love Apple–but its current growth model will not be sustainable in the long run.

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