Evidence Apple (AAPL) Will Launch A Major New Breakthrough Product In 2013
In June 2007, Apple (AAPL) introduced the first "iPhone" and in April 2010, they introduced the first "iPad". These events introduced new breakthrough products or product categories to the world that altered the consumer electronics marketplace forever. These two product categories now account for over 65% of Apple's revenue and over 75% of its profit. Since, April 2010 there have been no real "breakthrough products" of the kind I mentioned above from Apple. While there have been significant technological advances to existing products, since 2010 Apple's competitors continue to advance on Apple's lead.
Now, with total sales of around 165 billion dollars annually, Apple needs a new "breakthrough" product or new product-line to maintain it's global reputation as "the leader" in consumer electronics product innovation and to continue to create consumer excitement for it's brand worldwide. Such an event would add another major source of new revenue growth as well as have a significantly positive impact on Apple's share price.
Evidence That A Major New Product May Be Launched in 2013
Apple's R&D resources to develop new products has never been greater. Its R&D spending has been rising rapidly at a rate of close to 40% annually over the past 2 years alone. Today, Apple is spending over $1 billion per quarter in R&D, which is 4 times greater than the level of R&D spending in 2007 when it launched the iPhone. I believe another major new product launch is imminent. The evidence is as follows:
1) The timing is right. The first Apple iPhone was introduced in 2007 and was followed three years later, in 2010, with the launch of the first iPad. Now 3 years later in 2013, another breakthrough product should be ready for launch given Apple's corporate new product and innovation focus and commitment
2) Following the launch of the last major product (iPad) in April 2010, it would make sense that defining and influencing Apple's next great product-line invention would have been an urgent personal priority for Steve Jobs. He would have had about 16-17 months to help define the next new product category for Apple prior to his death in October 2011. In fact, Walter Isaacson says in his recent biography on Jobs that he was very active in Apple's new product development during the last days of his life. Apple would give high priority to completing Jobs' last new product vision expeditiously.
3) In October of last year, Tim Cook announced a major shake up in Apple's senior management team. Notably, he selected Jony Ive to continue as Design SVP but to also take over leadership of Apple's human interface team. In addition, he announced that Apple's Scott Forstall, SVP of IOS would be leaving the company but would remain as his advisor until sometime in 2013. It has been reported that Forstall was a very polarizing force within Apple and many senior managers could not work with him including Jony Ive. In their October press release Apple emphasized that the management changes were necessary to increase collaboration. If Apple was planning a major new product-line launch in 2013, these management changes would be critical to CEO Tim Cook, given he is not the "product decider" that Jobs was. As a result, he has essentially picked Jony Ive, as his "Product Chief " in order to define clear product development leadership and to ensure all senior managers and cross functional teams were aligned for its success once the new product was defined.
4) Tim Cook decided to keep Scott Forstall on Apple payroll as an advisor to him into 2013. This move would make sense if a major new Apple product was planned in 2013. Given Forstall's inside knowledge and key involvement in any new product since Jobs' death, it would make sense to keep Forstall on the Apple payroll and retain him as an advisor until after the new product launch.
5) Finally, all of Apple's major products went through major upgrades in the second half of 2012 including the iPod, MacBook Pro, iPhone and iPad. This level of broad product-category upgrades has never happened before in such a short time-frame. This leaves Apple with a nice opening for a major new product launch to occur sometime between March and July of 2013. It would also allow for increased focus of management resources on such a new product or product category.
It could be easily argued that the evidence above is all circumstantial and, of course, it is anyone's guess what Apple's next major new product innovation will be and exactly when it will be introduced to the marketplace. Nevertheless, based on all the evidence above (taken together), I believe it will come in 2013 and will create new excitement in the company's ability to continue to transform the consumer technology marketplace far into the future.