It's not just about the next hit product. Apple is preparing for a future beyond phones, tablets, watches and TVs, in which it's the premium brand for life in a fully digital age.
As 2013 draws to a close, Tim Cook is feeling good. The holiday quarter once again proved that Apple's products and stores can draw a crowd. Pent-up demand for new iPhones and iPads was satisfied once again, and Apple's reputation as a purveyor of objects of desire was reaffirmed. As a reward, Apple' stock price hit a 52-week high this month.
Apple's precision-engineered, meticulously designed, mass-produced objects of desire are not the most advanced or clever computing machines. Many Android devices are tricked out with more pixels and features. Nor is Apple the undisputed market share leader, which is not the company's first priority.
After its initial breakthrough product and domination of the market, Apple cedes share to followers and carves out a highly profitable niche. Like BMW in the automotive industry, Apple is not trying to blanket the market. The Android platform now maintains the majority market share by far, especially outside the US, but for contestants other than Samsung the profits are slim or none. And, Apple's mobile platform, iOS, accounts for more than 50 percent of mobile Internet usage, according to Net Market Share research.
Mobile and tablet worldwide market share of operating system usage for November 2013. Net Market Share collects browser data from a worldwide network of over 40,000 websites. (Credit: Net Market Share)
In the coming year, Apple will continue its wash, rinse, repeat cycle, incrementally refreshing the iPads, iPhones, and Macs with more speed, less weight, longer battery life, additional sensors, and improved apps.
There are also hints that 2014 won't be another year of just incremental improvements like 2013. Apple could reveal something more dramatic and groundbreaking than adding a fingerprint sensor to an iPad or delivering iPhones and iPads with bigger screens and better cameras, or finally shipping the powerful R2-D2- looking Mac Pro.
It's been four years since the company's last market-defining product, the iPad, was unveiled. Here's what Steve Jobs said at the time: "iPad is our most advanced technology in a magical and revolutionary device at an unbelievable price. iPad creates and defines an entirely new category of devices that will connect users with their apps and content in a much more intimate, intuitive and fun way than ever before."
Apple is rumored to be working on several products that could be eventually pitched as the "most advanced technology in a magical and revolutionary device at an unbelievable price." According to reports, Apple has in excess of 100 people working on an "iWatch." The company has trademarked the iWatch name around the world, and has filed 79 patents containing the word "wrist."
Neptune's Pine is among the upstarts trying to lead the next wave of wearable computing. (Credit: Neptune)
Following its usual product strategy, Apple isn't rushing to market to join the pack. Pebble, Samsung, Sony, ZTE, Martian Fitbit, Basis, Neptune, Metawatch, Qualcomm already have wrist wearables in the market, and LG, Google, and even Dell might be working on similar products. No one so far has a hit product. Apple hopes that an iWatch can follow the same pattern as the iPod, iPhone and iPad -- not the first in its category, but the one that redefines a market and dominates it for the first phase of adoption.
That will be a far more difficult challenge than in the past with all the innovative startups chasing the dream. And, the bar is set much higher for Apple.
It may be that an iWatch will focus on a few apps, such as health and fitness, and serve as more of an accessory to the iPhone. You don't have to take it out of your pocket to browse alerts and other information or talk to Siri. An iWatch with a beautifully curved, sapphire touch screen and sleek band would be more fashion statement than game-changing product.
In fact, Apple is on a mission to become more fashion forward. The company added two major fashion industry icons to its executive ranks. Former Yves Saint Laurent CEO Paul Deneve joined as a vice president to work on "special projects," and Burberry CEO Angela Ahrendts was tapped to lead retail operations, managing the online store and more than 520 brick-and-mortar outlets.
That enhanced fashion IQ could be applied to a range of entertainment products, another area that Apple wants to transform. The company could launch a stylish, large-screen 4K TV with Apple TV built-in or a set-top box this year, accompanied by apps that plug into iOS ecosystem and take the pain out of managing and controlling what's on the screen or in the box.
One Apple patent describes a head-mounted goggle system for providing a personal media viewing experience. The goggles could be linked to a devices, such as computers, televisions, smartphones, and gaming systems.
And, don't be surprised is you start hearing rumblings about eyewear from Apple. The company has many patents for head-mounted displays and other technologies relevant to augmenting-reality devices like the Oculus Rift and Google Glass. Apple will play the tortoise to Google's hare, watching the landscape evolve and taking its time to create a more perfect device that will attract tens of millions of buyers.
What's becoming clear is that Apple isn't just focused on trying to create another hit product. The company has long been preparing for a future in which technology is deeply woven into the fabric of everyday life. It's about creating an experience and brand that represents the best of the digital future.
iPhones, tablets, watches, glasses, TVs, sensors, robots, and cars are vehicles for enabling Apple's software and services to flourish. It's about becoming the premium brand for living in a fully digital age, in which billions of people and tens of billions of objects gathering and sending signals are connected.