Netflix has bounced back as they continue to redefine the model they originally developed. Their new focus on original content offering is their bid to become a mobile HBO. It remains to be seen how successful this path will be, but the company clearly realizes it must continue to push forward in order to hold on to market share. The last thing they want to be is another Blockbuster.
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The problem that companies face is the environment is fast-moving; it is difficult to forecast consumer and business preferences. Hardware companies, software firms, and application makers for mobile devices are all facing innovation challenges. What might be hot one day could very well be yesterday's news. One only needs to look at Zynga's application Draw Something to see how fast user rates can plummet if an application goes out-of-favor.
The challenge facing companies is how to provide a product that is useful today but also leads consumers to new ways of addressing old problems. A recently released IOS video editing application, Montaj, seeks to meet this challenge in the video space and so far has garnered positive press. It's an example of a company seeking to attack an existing market (video editing) in a new way. It remains to be seen how successful this product will be, but the company clearly understands that a conventional product is simply not be enough to win in the marketplace.
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Innovation requires understanding today's environment in anticipating consumer and business preferences in the future. Steve Jobs was a genius at this task and I believe Johnny Ives will work closely with Tim Cook to continue Apple's momentum forward. But investors will be watching to see if innovation continues at this company. And in the entire tech space, innovation will be required not only to capture market share but to ensure survival.
Companies that cannot adapt and innovate will find themselves losing market share and could very well become irrelevant. Innovate or die; that's the cold reality in today's marketplace.
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Michael Yoshikami, Ph.D., CFP, is CEO, Founder and Chairman of the DWM Investment Committee at Destination Wealth Management. Michael is a CNBC Contributor and appears regularly on the network. DWM is a San Francisco Bay Area-based independent money management firm that provides fee-based wealth management services to institutions and individuals around the world. Michael was named by Barron's as one of the Top 100 Independent Financial Advisors for 2009, 2010 and 2011.