How Apple Cuts Up the Competition

I was thinking back to my original list of features for the iPad, iPad Score Card. A few things Apple missed back then were finally added with the iPad 2.

The iPad 2 comes in black or white.

We didn't get a mini DisplayPort, but we did get a video out adapter. We got the video camera and a dual-core processor that beats a single-core. Additionally, it is thinner, we likely have OpenGL support, iMovie, FaceTime, new covers, and it comes in white.

This incremental approach got me thinking about the whole Apple business model. The new FaceTime app came from development of the iPhone 4. The A5 processor in the iPad 2 will probably be used on the upcoming iPhone 5 (and probably the 5G iPod touch as well).

The addition of OpenCL may not be ready, but other technology from Mac OS X will get added in the next round of iOS. And we've already heard that features from iOS 4 are getting moved to Mac OS X 10.7 Lion.

Innovation: Getting There First

This constant movement of features, design, and technology that is going from one product line to the next is a constant bite against the competition, keeping them from getting an advantage over Apple. For each of these small details, Apple gets there first and leads the adoption of the design.

To show how Apple leads technology adoption, just look at the iPhone. How many touchscreen-only phones were around before the iPhone? None. Now how many Android, Blackberry, and Window 7 phones heavily imitate the iPhone? Tons.

Sometimes Apple's early lead keeps it ahead of everyone else. How many laptops come with all aluminum cases? A few. How many are built from single blocks of aluminum that were milled to size? Only Apple's.

How many smartphones have app stores? Many. How many app stores are as big as Apple's? None.

The Upgrade Cycle

These spikes in design and innovation are like teeth on the serrated edge of a knife tearing into the market and easily carving away market share for Apple. Put these same innovations on top of the annual product cycle, and the simple knife become a spinning saw blade that is self-sharpening each time it goes around. Each cycle, Apple sharpens the bite on their products using innovations from the previous product line updated.

The self-sharpening nature of Apple's product development cycle makes it a tough company to get ahead of. Even if you briefly win on features, in three to six months Apple will be rolling out new features on a product you don't make and later integrating these designs into its other products using months of market experience - months of experience you didn't get, because you don't operate in all the markets that Apple does. Then Apple uses these features from this other market to destroy you on the next product cycle refresh.

Apple gets the tech world to help with this strategy. If you can get Apple to use your new widgets, service, or design, you are almost guaranteed that everyone will be screaming to use it for their device as soon as possible! Look at Intel working with Apple on processor design or turning Light Peak into Thunderbolt.

Follow the Leader

Watch the stock market price on some company go up after landing a contract with Apple. Where Apple goes, the market often follows.

If you wonder why the stock market isn't punishing Apple stock while Steve Jobs is on medical leave, this is the answer. Apple has become a spinning blade that shows no signs of going dull, and by design it is keeping its edges sharpened every year. Apple is simply too frightening a company to write off.

Next time you see a big headline touting how Android tablets will challenge the iPad, ask yourself who has the advantage in the long run? Where is Google going to take design improvements - from its search business or web application business - and roll out a better product than Apple will be making six months from now?

Most of what Google does is match Apple or make tweaks to other existing designs. Google is a fast follower; it is not a leader, and it doesn't have the product depth that Apple is bringing to the fight.

Controlling the Game

One other hidden advantage for Apple - as if it didn't have enough - is that by limiting how many new features are added, it controls costs. This is a double benefit. First is the cost savings by sticking with existing ideas but refining production costs (e.g., few parts, simpler assembly, and dedicated production lines). Second, it increases Apple's buying power with known components and suppliers.

It would take an incredible amount of mismanagement for Apple to loose its long-term advantage, or technological innovation as large as the Internet to leapfrog Apple's future plans.

Wishful thinking by anti-Apple people isn't going to change that.