Has Apple (AAPL 0.29%) lost its role as a leader in innovation?
This is a question that's been asked repeatedly by Apple naysayers in the know more than three years since co-founder Steve Jobs passed away. And although I personally disagree with this sentiment, it's hard not to acknowledge the evidence that supports these claims.
With Jobs at the helm, Apple played pivotal roles in the expansion of the respective markets for personal computers, digital music, and mobile devices. Since Jobs' passing, Apple's management has issued significant updates to its already-existing product portfolio and introduced only one new product -- an Apple Watch that has still yet to arrive.
However, simply concluding that innovation is dead at Apple is a simplistic arrival from this line of thinking. Apple remains a company fixed on leading the charge of innovation, and one recent example certainly illustrates this in its own way.
Apple and 5G networks
Although it gained scant recognition, Apple recently joined the Next Generation Mobile Networks (NGMN) Alliance, a telecom industry body that's currently attempting to aid and standardize the development of 5G. This might sound uninteresting or vague, but it's actually an important move.
You've probably heard the terms 3G or 4G to describe the mobile network standards on which your smartphone operates. In layman's terms, these titles roughly refer to the speed at which currently existing wireless networks operate.
New wireless standards have been historically developed and deployed at around 10-year increments, and the development of the next standard, 5G, is slowly gaining momentum. 5G also offers consumers plenty of reason for excitement. This next standard holds the promise of breakneck data streaming speeds that are both more energy efficient and more responsive. However, at present, 5G remains years away from commercial deployment; most sources cite 2020 as a realistic target. But this upcoming standard offers the promise of the "next big thing" in the telecom industry, so it's encouraging to see Apple play a part in shaping its development.
Why this matters for Apple
Right now, the MGMN Alliance's membership consists mostly of telecom firms and research institutions, and Apple's joining the initiative probably won't mean it will take a central role in the defining of the 5G standard. But that's also not to say this move isn't significant.
To me, this signals that Apple is still looking and planning far into the future in its attempts to align its product portfolio, especially the ultralucrative iPhone, with the major trends shaping the telecom industry's future. Although the Mac and iPad lineups are also exceedingly lucrative for Apple and its shareholders, it's beyond refute that the iPhone is Apple's most important product line.
Source: Apple 10-K filings
And thanks to recent developments, the iPhone's importance to Apple should only increase in the years to come. Although they have yet to hit the market, analyst expectations for the upcoming Apple Watch remain largely muted as the overall revenue opportunity of the wearables market, let alone Apple's slice of it.
Perhaps more importantly in light of recent events, Apple's new large screen iPhone 6 and 6 Plus are likely to cannibalize sales of Apple's second most important financial driver, the iPad. With the 5.5 inch screen of the iPhone 6 Plus comparing relatively favorably to the 7.9 inch of Apple's iPad Mini, there's a strong case to be made that the iPhone 6 Plus goes a long way to eliminate the use case for the iPad Mini.
So at the end of the day, this recent news for Apple won't directly result in any immediate or significant financial impact for Apple, but that isn't to say that it isn't important either. Rather, Apple's move to join the MGMN Alliance means it's laser focused on keeping its golden goose at the leading edge of the changing telecom landscape as it evolves. It's a signal that Apple remains every bit the leader it's always been helping bring the future into reality, and that's certainly worth noting at a time when many have criticized Apple's for just the opposite.
