Apple: Is There Still Scope To Innovate?

| About: Apple Inc. (AAPL)

Apple (NASDAQ:AAPL) is arguably reaching a crossroads in its development. As Christopher Waller, a fellow contributor points out in his article, Apple essentially started with larger computer screens and a smaller iPod screen, and filled in all the screen size gaps before getting to where we are now. The iPod Nano is probably the smallest screen size that is possible while still maintaining functionality, and the iMac 27-inch screens are large enough for any computer. So the argument then goes that Apple has exhausted the possibilities, filled the avenues for development, and has nowhere left to go. This argument, however, misses out a key factor. This factor is user interaction.

What many people often forget is that Apple has not only been revolutionary in developing devices with functionality that has never been seen before, but it has also been revolutionary in how users interact with their devices. On the whole, Apple does not invent the concepts itself, they are normally already in small-scale production, but what it does do is take good ideas and develop them into the best products in the market.

The Mouse

It all started when Steven Jobs paid a visit to the Xerox (NYSE:XRX) research labs, where he found a computer with which one could interact using a 'mouse'. At the time this was unheard of, and was only being used at Xerox for specialist functions, but Jobs saw the potential. He developed the concept of clickable icons and in 1983 launched the first Apple computer that used a mouse called the Apple Lisa. While the initial product was not a huge success, it was the precursor to almost every computer of the next thirty years, and users now had an intuitive way to interact with their computers. The mouse was born.

The Click Wheel

Apple Mac computers continued for many years, with varying success, but Apple's next enormous product was the "1000 songs in your pocket" iPod. Previous MP3 players had incorporated interaction in the form of forwards and backwards buttons, but when wanting to cycle through lists of songs this proved inefficient and slow. Jobs saw the potential for something quicker, and developed the click wheel. The click wheel is now taken for granted, and considered a thing of the past, but at the time this was a brilliant and revolutionary idea, changing the way in which users could select information on a much smaller device than a computer.

The Touch Screen

Again Apple went through many years of product development, and with iPods booming it was doing very well, but come 2007, it was beginning to lose the edge over the MP3 market and desperately needed something new. Fortunately, the iPod Touch had been developed, and was launched that year providing a completely new MP3 experience. Again, touchscreen MP3s had existed before, but none of them really worked and most were slow and unresponsive.

The perfection of iPod Touch's beautiful crisp screen allowed users to freely and intuitively interact with their machines and opened iPods up to a new market of less tech-savvy consumers. The added bonus of the installed accelerometer gave a gaming experience like none other, whereby users could tilt and turn the device to simulate real life actions, giving the Touch had another dimension, and adding to its subsequent success.


Touch screens on Apple products have been developing every year since Apple released the iPod Touch. Newer generations were released, the iPhone was released, and the iPad was released, all of which were built on the basic model of the iPod Touch (albeit with slightly different functionality). Apple filled in the gaps in terms of touchscreen screen size, from Nano through iPhone to iPad (potentially with a smaller version soon to be released). A larger touch screen, perhaps as part of a computer, is still a possibility, but the portable device gaps have been filled.

The next form of interaction therefore had to be touch free, and so Siri was born. iPhone users (and potentially, after release, iPad 3 users too) are now able to interact with their devices simply using voice command. The concept has been around for a very long time, but has never really worked, and only time will tell whether Siri is also a novelty, or whether it is really hitting upon something new. I'm sure that Siri will gradually be incorporated into all Apple devices, allowing everything to have a voice controlled nature. However, it is already clear that is not going to be a booming success on a device that already has a touchscreen, and needs to be improved greatly before being incorporated into a device without one.

Where next?

From basic hand movements, to spinning a wheel, to touching a screen, to speaking to the device, it could be argued that there is little scope left for new methods of interaction.

One only needs to look around to realize that this is not true. Sci-Fi movies for a start can give insights into potential regions for development in the future (just look at how many 'crazy' gadgets in old movies are now possible). In Minority Report, there are series of large screens with images that can be manipulated by the user waving his hands in the air and in Avatar there are touch screen tablets and desktops, and files can be dragged from one to the other if the devices are placed next to each other.

In other technology, multiple gaming devices are including motion sensitive feedback in their games (the Xbox Kinect for example) allowing users to genuinely go through the motions of the characters on screen, and in military technology pilots can shoot missiles from Apache helicopters by looking where they want to shoot. The Sci-Fi examples provide an idea (however impossible they currently seem) of where future development could go, and the other examples show where development has begun already. As always, Apple need not reinvent the wheel, but it can do what it does best, and repackage the creative ideas in an attractive but mass-market fashion, making the technology available to all.


The message here is that Apple is not finished. Sure the stock has made it past $500bn market cap to become the largest company in the world, and sure lots of others have failed upon reaching that benchmark, but the possibilities are still there for Apple if it can make them work. Technology has not reached a dead end, and if Apple can venture into news forms of user interaction, then the fact that it has filled in all the screen size gaps will no longer matter. Of course, it comes down to whether it succeeds in innovating and developing as it has done in the past, but as I discuss in this article, there is no reason why it shouldn't.

I am not attempting to put a new valuation on Apple, or even suggesting that it is necessarily the right time to buy. However, I hope this article has made the point that Apple has not reached the end. It has shown in the past that it can constantly improve and with just some of the possibilities listed above, there could be nothing standing in the way of continued astounding growth. Innovation is not dead, and so the stock growth potential is not either.

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in AAPL over the next 72 hours.