Apple has always been a leader in innovation. The company has pioneered several product categories and business models including the iPhone, iPad, AppStore and iTunes. However, recently, Apple’s innovation prowess has been brought into question as its latest iPhone 16 series failed to generate substantial buzz due to only incremental upgrades, its delayed forays into foldables and GenAI. The growth of iPhone shipments have also slowed down. But to truly understand Apple’s innovative spirit, we need to understand Apple’s ecosystem in more detail.
Source: Counterpoint Research
Foldables as a segment has shown a lot of promise. With strong marketing pushes from brands, it almost feels like foldables are everywhere and there seems to be a perception building that Apple is late to the segment, like with GenAI. But looking at the numbers, foldables, though growing at a high rate, are still a niche segment which contributed to only 1% of global smartphone shipments in 2023. According to Counterpoint Research Global Foldable service, even by the end of 2026, the penetration of foldable smartphones within the global smartphone market is only likely to be around 2%. Hence, Apple’s entry in the foldable segment even by 2027 is not late by any means.
In terms of GenAI, the features available in the market are also similar for all the OEMs and GenAI has not been the driving factor for smartphone upgrades yet for any brand. Brands are also figuring out whether or not and how to monetize those features and are still in search of that killer application. Apple, on the other hand, is leveraging its developer base to integrate Apple Intelligence not just at the user interface level, but at an application level to develop a “personalized intelligence system” for each user. This personal intelligence could be much more valuable in terms of usage and would also be an ultimate lock-in within the Apple ecosystem. However, it will take some time to build more features and launch them across regions while maintaining the privacy standards it has set itself, which is an additional challenge for Apple.
Innovation is not just about the product being sold but also the strategies with which the company is bringing those products to market. Apple has been constantly able to “re-invent” and “innovate” in terms of pricing and positioning strategies for the iPhone.
We also need to look beyond iPhone. Apple has taken categories like smartwatch, XR, TWS and re-invented them with multiple innovations. Even if Apple has not been the brand to bring new features such as full screen displays and multiple cameras to market, its prowess lies in execution and commercializing features at scale with customer centricity. Apple Vision Pro is perhaps the most complex consumer device ever built, an engineering marvel brimming with innovation. Apple has also re-invented the wearables category. It has positioned the Apple Watch as a health companion. Over the years, Apple has constantly added new health-tracking features and was the first to bring functions like ECG to the market. Most recently, Apple added sleep apnea detection on the Apple Watch and a hearing aid feature on the AirPods. Apple is enabling health tracking for millions of users in ways not easily accessible previously.
Consumers continue to value Apple’s ecosystem. This is also indicated by record breaking installed base, which is now over 2 billion active devices.
Source: Counterpoint research – Counterpoint research is a young and fast growing research firm covering analysis of the tech industry.
