Apple's Out of Ideas

Have you seen Apple's (NASDAQ: AAPL  ) new commercial? There's something noteworthy missing. See if you can figure it out.

Unlike the ads we've seen in recent years, which have generally shown off the iPhone, iPad, or Mac, or compared Apple's products with those of its competitors, the iPhone-maker now seems to have shifted into a full-on meta-brand. It's no longer selling products, just emotions. And while the sight of young people kissing in Paris may make some viewers feel warm and fuzzy inside, the subtext is leaking out behind the facade: "We're out of ideas. The pipeline has run dry. We don't have any new products so we're going to try to make you fall in love with the old ones again."

You could argue, of course, that Apple is returning to the spirit of its "Think Different" campaign of yesteryear, when Albert Einstein, John Lennon, and Winston Churchill graced billboards with the Apple mantra. But that was when we could reasonably believe that Apple did think different, when it had the products to back up that bold assertion.

The Apple of today is anything but. After all, this is a company that's been in full-on harvest mode since Tim Cook took over. In his nearly two years at the helm, only one significant new product has come out. And that product -- the iPad Mini -- is simply a scaled-down version of the iPad, a size that Steve Jobs famously knocked. Jobs considered the 7-inch screen to be a no-man's land between smartphones and full-sized tablets like the iPad.

Under Cook's stewardship, the company has also been profoundly un-Jobs-like in its focus on the financial side of the business. Since taking the top post, Cook has implemented a dividend and share buyback program, which Jobs refused to do. He also signed a $17 billion debt agreement to keep profits parked offshore away from the IRS, and gave a spirited defense of the company when asked by Congress to explain Apple's tax-minimizing strategy. Apple aficionados only wish they would see that kind of passion for the product side of the business like they saw from its founder.

Even the company's new ideas are old ideas. At WWDC last week, Apple announced the long-rumored iTunes Radio, but this product is little more than a clone of Pandora, Spotify, iHeartRadio, and the dozens of other music-sharing services already on the market. Pandora is immensely popular, with over 200 million listeners and more than 5 million likes on Facebook, and has been at the Internet radio game for over 10 years, yet it is still not profitable. How, exactly, does Apple carve out a significant space in this market, and drive enough profit from it to be meaningful to its bottom line?

iOS7, perhaps Apple's meatiest reveal during the conference, was similarly greeted with shrugs as critics took the new app designs to task. Notably, many of the icons were created by the marketing team, not the company's designers.  The market was similarly unimpressed with the presentation; shares finished down over 1% that day. But the bigger problem here is that Apple doesn't need a new operating system -- it needs new products.

On that front, consumers only have rumors to tease their imaginations, and plenty of ink has been spilled about potentially ground-breaking new products such as a full-screen smart TV or an iWatch. In December 2011, company supply chain sources said an iTV would launch by the summer of 2012. It's now the summer of 2013, and the world is still waiting with no further clue. Similarly, the iWatch has been in the works for some time; the company originally filed a patent for a type of video display slap bracelet back in 2011. Sources have said the watch is due out by the end of 2013, but that promise seems less believable with the delays we've seen in the smart TV.

Foolish bottom line
Apple is a technology company, not a beverage maker, and resting on its laurels is not a viable strategy for future growth. We need to see something new out of the Cupertino kids soon, or like Kodak before it, Apple may be nothing more than a beautiful memory.

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Read/Post Comments (22) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On June 18, 2013, at 7:30 PM, H3D wrote:

    Enough of the FUDS already.

    It's just 3 years since Apple changed the face of computing with the iPad. Do you expect that EVERY 3 Years?

    Strange how you don't mention the preview of the new Mac Pro from WWDC. You just say no new products. The only issue that anyone has raised with the new Mac Pro is "can afford it". We'll see. But they want it enough to wonder.

    And iRadio is just a clone of Pandora?

    So I can one click buy each track I hear on Pandora, can I? ?

    Stick to being a second rate journalist and stop trying to be a third rate technology CEO.

  • Report this Comment On June 18, 2013, at 7:35 PM, mdl00 wrote:

    Apple's n

  • Report this Comment On June 18, 2013, at 7:37 PM, mdl00 wrote:

    Apple's not out of ideas, you are. So you resort to Apple bashing and blatant misinformation.

  • Report this Comment On June 18, 2013, at 7:42 PM, CraigNotGreg wrote:

    Don't you find it slightly hypocritical to accuse Apple of being out of ideas by recycling a totally worn out theme in your piece? (i.e. Apple isn't innovating under Tim Cook). Here's a timeline for you:

    iPod - 2001

    iPhone -2007

    iPad - 2010

    On average that's a new product every 4.5 years, so please give your tired theme a rest.

  • Report this Comment On June 18, 2013, at 7:52 PM, Drinkofwater wrote:

    The author of this article should have his pen taken away. You put the ass in asinine, sir.

  • Report this Comment On June 18, 2013, at 7:54 PM, foolfool555 wrote:

    This author has no credibility. He says the "think different" ads(circa 98/99) were backed up by the products at the time. Uh, DUH, those ads were years *BEFORE* IPODS/IPHONES/IPADS.

    Apple right now is in a *much* better situation then when they ran the "think different" ads.

  • Report this Comment On June 18, 2013, at 8:11 PM, daveshouston wrote:

    I'm going to stop reading the Motley Fool. The articles are just too dumbed down.

  • Report this Comment On June 18, 2013, at 8:12 PM, mfooljdg wrote:

    The statement that Apple doesn't need a new operating system (really an enhanced IOS) is so far off the mark it boggles the mind. Just because it's not broken out as a major line item in the revenue/earnings statement doesn't mean it isn't critical to current & future products.

    In a similar vein you bash iTunes Radio for not being a big earnings generator. What is wrong with satisfying existing customers and adding to the reasons to be a customer? Are you suggesting the whole R&D team has been directed to abandon new product development to work on radio? Under your rationale every line of code they write should be scrutinized for profit generation.

    It is true that Apple is a victim of it's own success in that it encourages inept analysis to not only expect all past success to be repeated but to be repeated at an accelerated rate.

  • Report this Comment On June 18, 2013, at 8:15 PM, gmy wrote:

    You sir are a fool in the real sense. What a bunch of FUD. Everything you wrote in this article was not very well thought out. People like you are only in the business of getting clicks writing articles that have not been seriously written.

  • Report this Comment On June 18, 2013, at 8:21 PM, applefan1 wrote:

    Whomever wrote this article is about as dumb as they come.

    Companies like GE, and other BIG companies will do Corporate Branding advertisement campaigns from time to time.

    Apple decided to do some Corporate Branding advertisements because they have an entire product line that is probably more well known than anyone else's product line..

  • Report this Comment On June 18, 2013, at 8:30 PM, bobbydig wrote:

    Motley Fool is out of ideas so they need to bash Apple to get hits. ANo one care about Samsung, the copy cat company from the far east.

    Time for this site to close its doors. Its down right terrible and misleading.

  • Report this Comment On June 18, 2013, at 8:55 PM, blackrebel wrote:

    The new Apple ad is beautiful and effective in showing how all the company's products improve lifestyle which is the true power of Apple's work and brand. This writer is clearly biased to the point of being nonsensical. Apple is much more than just a technology company, despite the writer's desire to reduce it to the level of its competitors. And the idea that iRadio should be compared to Pandora is part of a false narrative to create drama and page views. iRadio is designed to support iTunes which has a gigantic account base and does huge business in digital media sales. Pandora doesn't matter to iRadio. In terms of innovation and new products, I guess the writer forgot about the new Mac Pro which is a revolutionary design - a whole new way of looking at this category of product. Also, it's just pathetic when writers like this resort to imagining what Steve Jobs would have done today or what he would think in order to support their Apple bashing. We don't know what Steve Jobs would have done. Nobody knows. So, Motley Fool bloggers, please stop. Your readers deserve better. Finally, when the writer makes a comparison between Apple and Kodak, it's clear he's just being extreme for the sake of page views. It's a ridiculous comparison in the light of Apple's true relevancy and massive and continuing impact. Apple gets an "A" for its new ad. This writer doesn't even know he's been schooled.

  • Report this Comment On June 18, 2013, at 8:58 PM, MADReports wrote:

    I joined just now to join the chorus of voices that are taking the writers of this site to task.

    Within the last couple weeks, more and more Ive come to realize the writers of this site are clueless.

    I vowed yesterday to no click any more posts from this site. I let my guard down and thought I'd read how Apple is out of ideas.

    When Apple gets slammed for not releasing a TV or watch they never said they'd release, it's time to call out the nay sayers.

    I'm actually using the new iOS7 and can say it is an improvement. Incremental. Not revolutionary, but still better than other mobile OS's.

    So fool me once shame on you. Fool me twice, shame on me.

    I won't be fooled again by the 'Moronic Fools'

  • Report this Comment On June 18, 2013, at 10:13 PM, shepula wrote:

    i've always thought this site was crap.

  • Report this Comment On June 18, 2013, at 10:14 PM, DanManners wrote:

    To My Readers!

    First all of the above comments (or below) were written by the same person. This is probably the same person who posts all the time on Yahoo Message boards. Who sends poison Twitter remarks to Cramer and Kass.

    Notice how the iProducts are always capitalized the same. If you look closely you will see similar patterns.

    Now to the article. The author is right. Apple could come out with great products and can't create new markets every year. But there is a staleness to Apple. Without Jobs we are nervous the creativity is gone. I hope not. But Apple is very big now and the law of large numbers can't be ignored.

    Apple could come out with great things and they could not. We have to wait and see. But what worries the write and others is exemplified with the time it takes Apple to do something. For instance. Why can they not have a big phone? They have one new phone and a couple of older ones still being made. I understand there are compromises but Samsung has done it and is selling those phones. If it is not perfect they who cares. So we always say next year. Next year.

    Apple is really to late to the table. They should have had a larger phone. Not tomorrow not next year but now.

    Apple messed up with many products. The recent release of IOS7 had many critics. Is saw the screen and it seemed too bright and colorful. And what about the maps fiasco. Did anyone check the app before releasing it?

    So we have lost confidence in Apple compounded by a new unproven leader. Cook is great dont get me wrong. But maybe not as the CEO.

    In my gut I know Apple could prove us all wrong but I feel that I need to give up on Apple and that is why I have been putting small shorts out there rather than the normal long positions I have had. As Michael Blair writes Apple is going down and he told me he expects it to drop below $ 300. The market has had many 3 digit up days where Apple was red. It is quite depressing.

    I expect Apple to not come out with a China Mobile deal anytime soon. There are too many problems and Apple won't play ball.

    I do expect a new 5s phone that is going to be hung out to dry as a boring insignificant upgrade. People might buy the 5 which will be somewhat cheaper of the 4s. People looking for bigger screens will check out HTC Hunwai or Samsung. I believe the competition is coming out with thinner phones that will be good enough and much cheaper.

    And now one very important point. When you went to Verizon and bought a phone you paid up to $ 200 and then you paid your monthly bill. The payments for the remainder of the phone were included in your monthly payments. Many companies are now (TMOBILE) financing the phone. You put a down payment and then pay x amount per month for a phone. If your phone is half the price, you save $ 10 a month and that is alot when your bill is $ 60 vs $ 70. People will be more cost conscious.

    I am going to get a new phone soon and I could care less what opsys I have. But I do want a larger screen. I like light, long battery life and that is it. Cook needs to get on board and fast.

    This next year stuff has to end. He doesnt need to change the universe. He needs put out more product so he doesnt lose customers. It seems he is incapable of doing so. Thus it will always be next year. I hope I am proven wrong.

    Apple is very complex. Their large size makes putting out products much more difficult. Thus if it keeps making money, I would let shareholders know that you will just keep pouring money into buybacks and reduce the float. That is basically the only way the stock can go up.

    They need to stay relevant, put out more product, make money and do buybacks.

  • Report this Comment On June 18, 2013, at 10:20 PM, DanManners wrote:

    One more thing. When Apple reported the recent increase in buybacks, they mentioned the original $ 10 billion had hardly been used. Thus we also are left to feel that the remaining $60 billion will be spent next year (here we go again) or the year after.

    Also in the back of our minds are we thinking that Cook has not done much yet with buybacks because he expects the stock price to get much lower. Buybacks can go alot farther when the stock is $ 250 vs $ 430. This makes us even more nervous. By doing the buybacks now, he is saying this is the bottom of the stock price and we know that because we have so many great new products coming out. With Apples stock volume at $ 6 million shares, buybacks could help lift the price.

    I know what you are thinking.. You wish I would post "next year"

  • Report this Comment On June 18, 2013, at 11:05 PM, neocolonialist wrote:

    One could argue that MSFT hasn't really changed their operating system since 2000 and yet has amassed amazing amounts of cash for their tired old products. I think AAPL has a little ways to go before they reach that point. This article seems a little on the quick trigger side to me. I can't rightly point a finger at a company that has thrice changed the entire world, thrice created essentially a brand new market place for their products and a company that pulls in more cash than most of their competitors combined. I uh think maybe its time to buy more AAPL!

  • Report this Comment On June 18, 2013, at 11:44 PM, Johnedlt wrote:

    Fool contrary to some of the comments is leaning in favor of apple. One publisher/ site that is leaning in the opposite extreme is Forbes. MAYBE a natural consequence of revenue from ads from the diff players since Samsung is an advertiser.

    From the investors point of view the stock is frustrating and if you have been a user of their products for a while you know their products are not perfect until maybe you spend some time with the competitors' platforms (win 7 for example).

    The problem I think is this: the company is overanalyzed to the point that expectations are raised so high only to disappoint themselves. From typography down to icon design the critics (who have I believe in the most part have hidden agendas to maybe move portfolio positions) will find and publish anything and everything. Do the same w android and its toast.

    That said, a value investor and an experienced contrarian should still be able to see an upside to the stock going into 2014 and beyond.

  • Report this Comment On June 19, 2013, at 12:57 AM, doorsx11x wrote:

    Apple could get away releasing new products at longer intervals in the past because back then the competition wasn't as strong. Other companies have now caught up and even surpassed them. They made the right move in going to the iPad mini, but now where is the larger iPhone? From the leaks surfacing online, it appears the 5s will be status quo, same tired two year design, although I'd argue there's not much difference to the 4,4s,5 and probably the 5s that will soon be announced. Considering that there are millions upon millions of phones sold with bigger than 4" screens, isn't Apple dropping the ball?

  • Report this Comment On June 19, 2013, at 4:49 AM, aqualite645 wrote:

    or is it perhaps that the emotion of being an apple fan and investor ha blinded you to potentially valid criticism.

    It is some time now since Apple actually lead the market in its product line. Cook was exactly the sort of person Jobs did not think sould run his company and to date he has exactly delivered in the sense of being everything that Jobs was not. Apple TV - still waiting, Aplle watch - already done, music - done already. the list goes on.

    A sign of concern must be when criticism is drowned out of hand.

  • Report this Comment On June 20, 2013, at 10:40 PM, mfooljdg wrote:

    To the earlier post regarding a larger phone, I agree either Apple has a view/plan I don't understand or they continue to drop the ball on a larger iphone. Now, if/when Apple comes out with a a larger phone, which I suspect will be 2-size iphone6 released in 2014, the naysayers will be out in force saying Apple is just copying (but that's hardly an argument to not do the larger phone..Apple does not need to innovate's ok to react to market desires once in a while).

  • Report this Comment On June 22, 2013, at 11:23 AM, stefna wrote:
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