Apple, an innovation laggard?

Ashlee Vance at BusinessWeek is the latest in a growing chorus of voices that say Apple has hit an innovation wall – no moonshots in sight.

“Google (GOOG), with its self-driving cars and virtual reality glasses, is really starting to show Apple up. Even Microsoft (MSFT), with its motion-detecting Kinect sensor and its incorporation of touch technology into all manner of devices, has added some pressure. It’s looking an awful lot as if we’re on the verge of an era in which massive hardware changes will occur, finally making work in such areas as robotics and human-machine interaction come to fruition.”

Problem is most media and analysts look at product pipeline as their innovation proxy. Wall Street uses R&D spend as its innovation metric and Apple spends a pathetic 2% of revenues on R&D.

And guess what? Apple has been in similar straits for most of the last decade. However, they have had business model innovation (transformed music, publishing, telecommunication markets), channel innovation (resulting in dominant retail and apps ecosystem), supply chain innovation (strategic investments in key components, well tuned contract manufacturing ). And when it comes to product – look at how many game changing features Apple has brought to market – retina displays, Siri, Match etc etc. And then there is the Apple secretive factor – if you can mask a 500,000 sq ft data center from Google Earth, you can do plenty to surprise competitors with all kinds of new products and services. Who’s to say Apple has lost that skill?

Take a look at the Apple chapter in my recent book – download below. You see tons of activities which provide significant competitive advantage beyond well designed products. And none of them add much to the R&D line item.

One of my favorite innovation metrics is What percentage of revenues come from product introduced in last 5 years? Benchmark Samsung, Microsoft, whoever you want against that metric and then let’s discuss who’s a laggard.

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