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Apple's Creeping Product Problem

http://www.fool.com/investing/general/2013/01/28/apples-creeping-product-problem.aspx

Travis Hoium
January 28, 2013

Soon after Steve Jobs took over Apple (NASDAQ: AAPL) in 1997, he drew a box on a board with four squares. He wanted Apple to go from a sprawling product line to four products. Computers for work and home with only two versions -- mobile and desktop. He consolidated development  into these four main products:

 Type

Consumer

Professional

Desktop

iMac

Power Mac

Portable

iBook

PowerBook

This simple grid became a symbol of Apple's product line in the early years of its recovery. When the iPod was introduced, it had one form factor and just a few memory sizes. The next generations of iPods included Nano, Shuffle, and Touch, but there were still only limited offerings. The iPhone and iPads started as single products with three memory options -- that's it.

Today, Apple has expanded offerings to five different iPods, three iPads, three iPhones, five different Macs, and Apple TV. Walk into an Apple Store and you could walk out with one of 17 products, not to mention size variations and any number of covers and accessories Apple makes. Plus, there's word that more variations of the iPhone are in the works -- and who knows what on the TV front. The simple table above has become a solution for everyone, losing focus on only the most important things, something we used to call product creep.

The curse of the giant company
Apple has done some of this product expansion out of necessity. Samsung was taking smartphone share with larger screens at lower price points so Apple responded by keeping the iPhone 4 and 4S in inventory and growing the size of the iPhone 5. The next generation will reportedly come with even more varieties, both larger and smaller. It's a natural response to competition.

The Mac lineup has also grown as competition added options for customers. The Macbook Air for travelers, the Retina Display for premium users, the Pro for pros. Apple is making a product to fit every possible need.

Fighting product creep
The challenge for Apple is to not fight every fad or trend in consumer products. Google (NASDAQ: GOOG) and Amazon seemed to be successful in expanding the tablet market to 7-inch devices, and Apple may have needed to respond with the iPad Mini, but where does it end? Google, in particular, can allow manufacturers using its OS to test markets and add products with less risk than Apple has with each product launch.

Smartphones are even more complicated. Google's operating system is being used by a number of suppliers and they can grow and shrink sizes and features with the trends of the market. Microsoft's Windows 8 operating system will allow a similar range of products for both smartphones a