Source: Apple. 

At the WSJDLive 2015 conference, Apple (NASDAQ:AAPL) CEO Tim Cook argued that there's as much innovation in this year's iPhone 6s as there was in last year's iPhone 6, dismissing the notion that the iPhone is on a two-year innovation cycle. Is Cook right? Let's take a closer look.

The big changes we saw in going from the 5s to the 6
In moving from the iPhone 5s to the 6 and 6 Plus, Apple brought the following improvements and changes to the table over the 5s:

  • Larger, higher-quality displays.
  • Slightly faster, more efficient processor.
  • Faster Wi-Fi and cellular connectivity.
  • Introduction of NFC for Apple Pay.
  • Improved rear camera (optical image stabilization for still photos added in the 6 Plus).
  • New industrial design.

All told, the iPhone 6 and 6 Plus represented solid generational leaps in features and performance over the already excellent iPhone 5s.

What about in going from the iPhone 6 to the 6s?
In going from the 6 and 6 Plus to the 6s and 6s Plus, Apple delivered the following enhancements:

  • Significantly faster, more efficient processor.
  • Faster Wi-Fi and cellular connectivity (the leap in going from 6 and 6 Plus to 6s and 6s Plus was actually larger than the jump from the 5s to the 6 and 6 Plus).
  • Introduction of 3D Touch.
  • Significantly improved Touch ID.
  • Improved rear camera (higher megapixel sensor and addition of optical image stabilization for videos in the 6s Plus).
  • Improved front-facing camera.
  • New casing material (7000 Series aluminum).
  • Massively improved storage subsystem.
  • Doubling of memory to 2GB.

Aside from the fact that Apple kept the phone design roughly the same and used the same display panels as it used in the 6 and 6 Plus, it appears to me that Cook is selling the iPhone 6s and 6s Plus short; it appears to be a bigger leap over the 6 and 6 Plus than the 6 and 6 Plus were over the 5s.

It wouldn't take much to "eliminate" the "s" cycle
The only things missing from the 6s and 6s Plus to keep them from being worthy of the name "iPhone 7" are new industrial designs (although arguably the iPhone 6s and 6s Plus, while visually similar to the 6 and 6 Plus, are new designs made of newer materials) and new displays.

I suspect that, to maintain its leadership in display quality against increasingly fierce rivals, Apple will start introducing new displays at an annual clip rather than once every two years. Indeed, according to one report from DigiTimes, Apple is likely to continue to use LCDs manufactured by Japan Display for the 2016 iPhone (i.e., iPhone 7) but is said to be considering a transition to AMOLED displays for the 2017 iPhone (i.e., iPhone 7s).

Given that Apple may start introducing new display technology at an annual clip, it probably wouldn't be far-fetched to see the company make design improvements and enhancements at a faster rate as well, ultimately obviating the need for an "s" cycle.

Expect acceleration in improvements from here on out
The iPhone business is Apple's crown jewel, and more than anything, the company needs to make sure that each and every year it puts out iPhones that make obsolete the models it released in prior years. At the same time, I'm sure Apple would like to continue to gain market segment share against Android flagship devices.

To do so, Apple will need to increase the pace at which it develops and deploys interesting new technologies. It's no coincidence, after all, that Apple has massively boosted the amount it's spending on research and development over the past several years:

Source: YCharts.

There's a reason Cook is confident that there are "tons of innovation left in the phone" -- his company is clearly investing heavily to make sure he's right.