Apple (NASDAQ:AAPL) stock has been on a tear lately. After a strong 2014, it's climbed nearly 20% this year, and it hit an all-time high at $134 just a few months ago.
Following the stock's descent in 2013 on some missteps by the company, good times have returned at Cupertino. Soaring iPhone sales have driven profit higher, lifting the stock price.
Tim Cook, whose leadership came under question during the stock's lull, is now being feted by much of Wall Street. Famed investor Carl Icahn even suggested that the stock is worth 85% more than its current value based on Apple's potential in the automobile and television industries.
However, despite the recent success of Apple and the iPhone, the company is still without a breakthrough invention under Cook. The Apple Watch could be that item, but it's much too soon to say what the wearable device's impact will be as it has not even hit stores yet. Early reviews have been mixed, with editors and readers on CNet rating it a 3.5 out of 5 stars.
The jury will remain out on the wearable device for some time -- at least until we start getting some early numbers from Apple. If it flops though, it wouldn't be the first time the Cook-led company has taken a swing on a new idea and missed. Here are a few other products that haven't lived up to the hype.
The addition of NFC capability was a key feature of the iPhone 6, enabling contactless, secure payment at over 700,000 locations around the U.S., from Walgreens to Whole Foods.
But Apple Pay has hit a few snags on its way to disrupting the credit card business. First, a wide range of major retailers, including Rite Aid, CVS, and Wal-Mart, have refused to accept the new form of payment because of their affiliation with a consortium called the Merchant Customer Exchange, which aims to implement its own contactless payment system to free retailers from onerous credit card fees. A few MCX members like Best Buy have broken away from the group and decided to accept Apple Pay, but those have been the exception.
Small merchants are also not playing ball, as 87% of independent businesses haven't purchased the equipment necessary to accept NFC payments. Those include restaurants, gas stations, coffee shops, and other frequently visited establishments that have little interest in spending money to give consumers another way to pay electronically, and thereby rack up further credit card fees.
Apple Pay is a long play for the company, as mobile payments are expected to grow exponentially in the future. Nevertheless, it's clear that the immediate impact of the technology has been underwhelming.
For years, investors and Apple fans alike have been holding out for a stand-alone TV set, a product that seemed like the missing link for a company that sells smartphones, tablets, and computers. The TV is the only major screen-based electronic device that's missing from Apple's portfolio, and it could potentially benefit from capabilities like Siri and FaceTime -- not to mention Apple's panache for design -- which would be a significant differentiator among the current selection of flat-screens.
However, investors' hopes were deflated last month when The Wall Street Journal reported that Apple had stopped pursuing a TV set after nearly a decade of research. While there was no real sell-off following the news -- profit from TV sales had not been priced in to the stock -- the decision means that Apple may have wasted resources on the TV project over the course of many years.
Apple's apparent decision to not build a TV is also mystifying, considering that a TV would essentially be low-hanging fruit for the company. Unlike smartwatches, self-driving cars, and virtual reality devices, the market for TVs is proven and seemingly ripe for disruption. Apple likely could have sold tens of millions of units a year, considering that global TV unit sales are over 200 million a year.
Finally, there's iTunes Radio. Though Apple's music streaming platform may not have been heralded the way Apple Pay and the Watch have been, there were high expectations for the service before its launch. Many expected it to replace Pandora and Spotify, the leading streaming options, but that has not been the case.
Though the service was greeted with fanfare by music lovers, many users eventually fled, going back to Pandora or whichever online DJ they had originally used. Less than a year after the launch of iTunes Radio, Apple acquired Beats Electronics for $3 billion -- in large part to take over its fledgling Beats Music streaming service.
This move calls into question the time and money spent on the iTunes Radio launch. Apple is currently launching yet another streaming service, which seems to confirm that the company views iTunes Radio as a failure.
iPhone is still the key
Investors who are looking for the next big thing from Apple may have to keep waiting. One problem the company faces is that the iPhone has been so successful that any new product will have to drive significant sales in order to have any impact on the company's bottom line.
Analysts expect Apple to sell 20 million to 30 million Watches in the product's first year on the market, which would yield sales of $8 billion to $12 billion based on a $400 average selling price. Even that would only lift revenue by 4% to 6%.
Tim Cook's greatest challenge, then, may not be how to create the next big thing, but to find new ways to grow iPhone sales. Like it or not, Apple investors' hopes ride on that single device for the foreseeable future.
John Mackey, co-CEO of Whole Foods Market, is a member of The Motley Fool's board of directors. Jeremy Bowman owns shares of Apple. The Motley Fool recommends Apple, CVS Health, Google (A shares), Google (C shares), Pandora Media, and Whole Foods Market. The Motley Fool owns shares of Apple, Google (A shares), Google (C shares), Pandora Media, and Whole Foods Market. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.