Apple is trying to tap into the billion-dollar industry of health and well-being monitoring, which is currently dominated by Sony and Fitbit. This is an encouraging sign of innovation at the company, something many question whether Apple possesses or not now that Steve Jobs is no longer at the helm.
Without innovation, tech companies get left behind. That's something Apple knows all too well and something we've seen in a couple of other tech giants recently.
Sony may be leading in the health and well-being industry but it's looking for the exit with its computer business. It's a fall from grace for a once high-flying company that focused on style with its machines — but failed to innovate. What Sony should have done was develop tablet computers much sooner than they did and with differentiating features. Sadly for Sony, this wasn't their first time at the mistake rodeo: They also blew it with the Walkman personal music player. They were huge market leaders but failed to recognize the shift in technology to digital. The got run over by the iPhones and Androids of the world.
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And, look at HTC. Despite rolling out a quality smartphone (HTC One), the company continues to lose market share and this week announced that they would enter the low-cost and mid-tier market. That sounds a lot like BlackBerry, which is struggling to hold on to some market share. The problem with HTC's new strategy is that market share in this arena comes with incredibly low margins — and that's not going to help HTC's fortunes.
Apple can't just come out with a new iPhone that is a minor upgrade to their current iteration; it simply won't fly. It's encouraging to hear the rumors suggesting a brand new take on the iPhone as well as efforts to enter the health-monitoring business. There's no room for a meek effort here. They've got to do something bold that is a game-changer. Apple needs that now more than ever.
Innovation is the lifeblood of technology companies. It's a lot like professional sports: You're only as good as your last game. Companies don't want to become the next Netscape or Yahoo, which is still struggling to regain its lost luster.
Apple needs to do three things to regain their reputation for innovation:
1. Present to the marketplace new products in untapped segments (such as TV, payment mechanisms, and health-tracking devices)
2. Deliver a next-generation iPhone that isn't just evolutionary but instead contains meaningful technological advances such as the fingerprint scanner included in the iPhone 5s.
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3. Paint a clear vision as to their view on the emergence of new technology and how it will be incorporated into products
Being an innovator not only means great technology but understanding what the market wants and delivering a product that is unique and differentiated. Sony and HTC didn't do that. But the marketplace demands it.
I believe Apple will shock skeptics and demonstrate in 2014 that innovation is alive and well at the company. While no one can replace Steve Jobs, there is ample bench strength that will push Apple into new markets with innovative products.
—By Michael A. Yoshikami
Michael A. Yoshikami is the CEO and founder of Destination Wealth Management in Walnut Creek, California. He is also chairman of the firm's investment committee.