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Why Apple is still the king of design and innovation

Apple introduces ios 7
NBC
Apple introduces ios 7

"If everyone is busy making everything, how can anyone perfect anything? We start to confuse convenience with joy. Abundance with choice. Designing something requires focus. The first thing we ask is: What do we want people to feel? Delight. Surprise. Love. Connection. Then we begin to craft around our intention. It takes time. There are a thousand no's for every yes. We simplify, we perfect, we start over, until everything we touch enhances each life it touches. Only then do we sign our work: Designed by Apple in California."

Those were the words that appeared in a video shown at the opening of Apple's Worldwide Developers' Conference last month.

The message was simple: Apple doesn't design noise, it aims to design substance, a point Apple may have felt pressure to emphasize considering that the Googles and Samsungs of the world continue to be championed as the new kings of design and innovation.

(Read more: This could threaten Apple's iPhone )

The heart of Apple is its power to create products everyone wants to have, including its competitors, said Bruce "Tog" Tognazzini, a human-computer interaction specialist at Nielsen Norman Group, who was also one of Steve Jobs early hires. This is why its competitors have continually cloned the company's products, he said.

"Apple will every so often come out with a breakthrough product and then everybody copies it, and that's where we are today. ... It seems like everything is coming to a halt, but it's not coming to a halt," Tognazzini said. "And I have no doubt about that whatsoever. They will come out with another product that will change everything. I don't think they are falling behind."

Wall Street, though, seems to feel differently.

Apple's stock has been in a steady decline since its all-time intraday high of $705, which it hit last September.

(Read more: Apple needs to treat employees 'like gods': Analyst)

Trip Chowdhry, managing director of Global Equities Research, recently released a note in which he slammed Apple for its failure to produce items other than a smaller or larger iPhone.

"The likelihood of Apple's being able to come up with an innovative product or smartphone that would create new demand is very slim, given that the stock is 40 percent below its high," Chowdhry said. "Today, Apple is a very different company. It has changed from being an innovative company to a company returning cash to the shareholders; and that has completely backfired."

Chowdhry, who has an overweight rating on the stock with a $650 price target, said that if the price doesn't increase in the next several months, key employees will begin to abandon Apple to work for companies such as Google.

Gene Munster of Piper Jaffray told CNBC recently that employee morale and the stock are linked, adding that Apple product launches may help boost both employee morale and the share price.

But Tognazzini, who founded the Human Interface Group during his 14-year tenure at Apple, disagreed that the company has lost its luster when it comes to recruiting and retaining talent.

"It's the place you want to go as a young designer or a young engineer," he said. "It's not slipping behind, or behind in having brilliant, world-class designers. It just does not come out with a product like the iPhone or iPad every year. We are all waiting, and we are all anxious."

(Read more: Apple iPhone 5S production to begin this month: Analyst)

While it's true that Apple doesn't release a game-changing product annually, the rate of its innovation cycle has actually increased, said Brian White, an analyst at Topeka Capital.

There was a six-year period between the release of the iPod and the iPhone, a three-year span between the iPhone and the iPad, and only two years between the launch of the iPad and the iPad mini. And there is reason to believe Apple's next huge innovative product is coming soon, White said.

Apple is on the cusp of embracing a new generation of products and design, White said, and one sign of this is the tech giant's shaking up its design team last year, which included the appointment of Jonathan Ive as the senior vice president of design.

Ive, who is responsible for industrial design and Human Interface (HU) software, last month gave a glimpse of the direction the company is moving in when he unveiled Apple's redesigned operating system, the iOS7, which features a much flatter, modern look.

(Read more: Apple hires former Yves St. Laurent CEO for 'special projects')

Though Apple is expected to release its next-generation iPhone—the iPhone 5S—along with a low-cost iPhone in the fall, the items rumored to be the next game-changing devices for the company are a smartwatch and a television.

A clue the company may be ramping up its push into wearable computing is the recent hire of Paul Deneve, the former CEO at Yves St. Laurent Group. "Someone like this ... I'm guessing would be very helpful as they move into the world of wearable electronics," White said. "He could complement Ive from a fashion perspective."

But a more likely indication of the wearable electronics shift is simply that the technology enabling this type of device now exists—specifically, Bluetooth 4.0.

(Read more: Future fashion: 10 wearable tech trends to watch )

White said that for a quality smartwatch to be developed, Bluetooth 4.0—a wireless technology that pairs devices with significantly lower power consumption—had to be available. Now that it is, a smartwatch is much closer to reality because it can be paired with a user's smartphone and other Apple devices in a meaningful way, he said.

"The big breakthroughs that occur in technology are the ones that allow you to have new kinds of design," Tognazzini said. "These are the building blocks that are going to allow Apple to come out with a good product. Remember, they don't bring out the first product—they bring out the best product."

By CNBC's Cadie Thompson. Follow her on Twitter @CadieThompson.

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