Apple Proves That Even a $900 Billion Company Can Be Quick on Its Feet
No company is perfect, not even Apple (NASDAQ: AAPL), which is arguably one of the biggest success stories in the history of tech stocks. Although Apple has been hugely successful in fundamentally reshaping computing technology with the introductions of the Mac, iPhone, iPad, and Apple Watch, there have been bumps along the way.
One thing that I find so impressive about Apple, though, is how each such bump proved to be an opportunity for the company to better its execution and, ultimately, its products to continue to enjoy dominant positions in the markets that it serves.
Image source: Apple.
Here, I'll go over three examples of Apple messing up and emerging from those mistakes stronger.
1. Large-screen smartphones
In 2011, Samsung (NASDAQOTH: SSNLF) launched its first Galaxy Note smartphone, which arguably kicked off the trend toward jumbo-sized smartphones as it sported a screen that measured 5.3 inches along the diagonal. As a result of the success of the Galaxy Note, both Samsung and other Android-based smartphone vendors continued to launch devices with increasingly large displays.
By 2013, Samsung had released the third iteration of its Galaxy Note smartphone with a display that measured a whopping 5.7 inches along the diagonal.
In 2012, Apple increased the size of the display on its flagship smartphone, the iPhone 5, but the increase was from 3.5 inches to 4 inches. In 2013, Apple introduced the iPhone 5s, which retained the same screen size as the iPhone 5 and was substantially smaller than the displays on competing smartphones.
As a result of Apple lagging behind in screen size, the company's phones were arguably less exciting than competing devices, something that undoubtedly cost Apple both market share and mind-share.
During the second half of 2014, though, Apple struck back hard. It launched two flagship smartphones simultaneously: iPhone 6 and iPhone 6 Plus. These phones sported displays that measured 4.7 and 5.5 inches along the diagonal, respectively.
With this lineup, Apple wanted to offer both mainstream users as well as large-screen phone enthusiasts something compelling. The strategy worked, as Apple's iPhone 6 product cycle was its best ever, with iPhone unit shipments and revenue growing by 37% and 52% year-over-year, respectively .
2. Bendgate
Although the iPhone 6 and iPhone 6 Plus were easily Apple's most successful iPhones ever, they did face a critical issue -- they bent rather easily. This was commonly referred to as "bendgate" by some users and tech press.
This problem probably didn't hurt the marketability of the devices that much, as evidenced by the huge year-over-year growth in iPhone shipments that those devices drove, but it seems rather embarrassing that such a large, rich, and detail-oriented company would overlook such a simple design flaw.
Fortunately, that design flaw didn't persist. Apple's follow-on generation to the iPhone 6-series smartphones, known as the iPhone 6s and iPhone 6s Plus, rectified this issue through both design enhancements as well as the use of a new, higher-grade aluminum that was far more durable than that used to construct the iPhone 6 and iPhone 6 Plus.
Bendgate is nothing more than a distant memory now.
3. Artificial intelligence stumbles
Apple was arguably a pioneer in modern smartphone artificial intelligence, as it introduced its Siri digital assistant back in 2011 as part of the iPhone 4s. However, over the last seven years or so, Siri has remained, for lack of a better word, "dumb" as other virtual assistants from the likes of Amazon, Google (NASDAQ: GOOG) (NASDAQ: GOOGL), and Microsoft have gotten quite smart.
Apple's weak Siri offering has made it harder for it to successfully compete in the blossoming smart speaker market (Apple's first smart speaker -- HomePod -- was praised for its sound quality, but Siri was panned) and, more broadly speaking, as artificial intelligence becomes central to smartphone platforms, Apple's weakness in artificial intelligence could prove an Achilles' heel.
However, now that artificial intelligence is emerging as a key technology for future computing devices, Apple seems to be quickly working to remedy its weaknesses here. For example, back in April, Apple reportedly hired Google's artificial intelligence chief, John Giannandrea, to head up its "machine learning and A.I. strategy"; he will report to CEO Tim Cook.
Apple's job listings have also seen a surge in artificial intelligence- and machine learning-related positions related to both software and hardware.
We'll have to see if Apple's moves to try to become a leader in artificial intelligence pay off, but from the outside looking in, the company is probably on the right track.
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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Teresa Kersten is an employee of LinkedIn and is a member of The Motley Fool's board of directors. LinkedIn is owned by Microsoft. Ashraf Eassa has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Amazon, and Apple. The Motley Fool has the following options: long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple. The Motley Fool has a disclosure policy.
