A Decade After Jobs: Has Apple Lost its Edge?

Fall 2021 marked the tenth anniversary of Steve Jobs’ passing. Known for co-founding Apple Inc. in 1976, Jobs steered Apple away from the brink of bankruptcy in 1997 and into the pockets of billions of consumers. Many agree that Jobs’ obsession with design and innovation was foundational to the company’s rebirth; under his leadership, the Cupertino-based firm proved time and time again that no rival was immune to the underdog’s upheaval of  industries — just ask Canada’s very own Blackberry and its now-defunct smartphone business. The iPhone forever changed the way we interact, the iPod shattered the music industry, and the iPad created a new market altogether. Each of these products was the brainchild of Jobs and his laser-focused determination, as he innovated in ways that few could foresee.

A decade after his death, many now wonder how much of this culture remains. Where the most visible aesthetic change over the last generation of iPhones is the camera placement and where a six-year-old Apple Watch is practically indistinguishable from the newest model, no one is blamed for reminiscing about the company’s glory days of frenzied innovation.

While many debate whether Apple’s business model has changed over the course of the decade, one fact remains; it has gone above and beyond shareholders' expectation for profits. With a market capitalization now reaching three trillion dollars, Apple has consistently ranked  among the top three most valuable corporations in the world. Looking into the firm’s revenue breakdown offers insights into the corporate priorities of Jobs’ successor, Tim Cook. With iPhone sales accounting for nearly 49% of Apple’s overall income in Q3 2021, it comes as no surprise that the firm chooses to develop new handheld devices on a yearly basis. Its approach, however, remains conservative. Far from revolutionizing the smartphone market, Apple’s strategy is based on incremental changes; upgraded cameras, battery life, and chipsets are a recurrent theme year after year. This change of paradigm arguably represents a clear tradeoff between the will of tech enthusiasts and that of Apple’s shareholders. After all, audacious innovation in tech is a gamble — just ask Google’s parent company Alphabet and its $24.3 billion operating losses sunk into its “moonshot projects”, such as the infamous Google Glass and Loon, a solar-powered internet balloon. Apple itself also has a long history of failed products. Few know of the 1996 Pippin, an all-in-one gaming and internet console that the company canceled a year upon release. Edgy millennials may recall iTunes Ping from 2010, a music-centric social network that shut down barely two years after its launch. More recently, avid Apple consumers may also remember the AirPower wireless charging pad, a product that was fully developed and publicly announced in 2017, before the company subtly abandoned it before it hit the shelves. Perhaps some of these product failures have given Apple pause by proving that the company does not indeed have an infallible Midas touch. Investors, for the most part, now appear to favour the predictability of incremental updates to the uncertain outcome of entirely new or groundbreaking products. 

Nevertheless, analysts are quick to point out how the company’s research and development budget has recently reached all-time highs. Particularly in the context of Apple’s ever-growing portfolio of subscription and software services, the firm appears to be paying greater attention to new and diversified revenue streams. With $17.49 billion generated in the third quarter of 2021, Apple’s software and online services demonstrated strong growth thanks to products such as its Apple Music and Apple TV+ streaming services, iCloud storage, News+, and Apple Arcade, among others. While subscription-based services represent a slight departure from the company’s more traditional hardware-focused business operations, it is certainly one that investors see value in through reliable and recurring revenue streams. 

An oversimplified way of describing how Tim Cook has led Apple since Jobs’ passing would be to call it steady and predictable. With the strength of the company’s interconnected ecosystem and the extremely loyal consumers that result from it, Apple bets that a steady strategy of incremental hardware and software updates combined with an ever-growing offering of subscription services can assure continued growth. Then again, Apple would be wise to learn from the history it actively played a role in writing — confounding steadiness with complacency has been the death kneel of several other industry behemoths before it.