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When Apple's market cap soared to $660 billion last fall, the company was worth more than Amazon, Facebook, Google, Microsoft, two Nokias, and three BlackBerrys — combined. But then Apple's share price tumpled 35%, and it lost its mantle as the world's most valuable company. So what's gone wrong? Could it be that Apple's best quarter ever — and the second most profitable in U.S. corporate history, at $13.1 billion — is a head-for-the-hills disaster? With margins declining and no imminent "insanely great" new products (as Steve Jobs liked to call them), has the age of Apple come abruptly to an end?

To understand what's happening with Apple, it's useful to step back from Wall Street's noise and recognize five essential truths about Apple's success.

Truth No. 1: Apple has never been a nonstop, new-product machine.

Apple's stock wouldn't have plunged if expectations, financial and otherwise, hadn't been so high. Apple is the market's most emotionally driven brand, "the Super Bowl for stock lunatics," as Stock-Twits CEO Howard Lindzon describes it. Every tech blogger, hedge-fund manager, and fan has a fervent opinion. We are conditioned to believe in Apple's game-changing powers, thriving on the belief that the next revolutionary product was coming: iPod, iPhone, iPad. However, these major leaps were not rapid; six years separated the launch of the iPod and iPhone, and three years between the iPhone and iPad.

The pace of adoption for these products was also gradual. The iPad took two years to sell 100 million units; the iPhone nearly four years; the iPod six. This contrasts with the impatience about upcoming products today, such as wearable devices or voice-controlled TVs. Wall Street's desire for immediate innovation conflicts with Apple's traditional, more measured approach, which has never been about rapid-fire new products but rather about thoughtful evolution.

Truth No. 2: The real driver of Apple's success has been incremental innovation.

While Steve Jobs was renowned for pioneering entirely new product categories, Apple’s hallmark has been improving existing products through refinements—often releasing multiple versions of the same product. For instance, the iPod, launched in 2001, changed how people consumed music; but its sales skyrocketed only after the introduction of the Nano in 2005. Apple released around two dozen versions of various iPod models, capturing 70% of the market.

Similarly, the iPhone has seen multiple generations: the original in 2007, followed by the 3GS, 4, 4S, 5, and so on. The same pattern applies to the iPad, which went through four generations within two years. Software innovations like the iTunes Store, App Store, and Siri helped amplify the appeal of these products. This steady, incremental approach highlights Apple’s strength: continuous improvement over revolutionary disruption.

Truth No. 3: Apple’s distinctive reputation can hurt as much as help.

Apple's reputation for relentless innovation and sleek design has set high expectations. Some consumers find recent product updates underwhelming, waiting for true revolutionary breakthroughs that are rare. Others feel let down by feature omissions—such as the original iPad lacking a camera—used to generate demand. As a result, Apple no longer receives full credit for its innovations; perceptions have become more critical.

The more consumers and critics expect the unexpected, the harder it becomes for Apple to surprise. This phenomenon resembles the M. Night Shyamalan effect: increased anticipation leads to heightened disappointment when expectations aren't met. This challenge impacts sales and brand perception, emphasizing the difficulty of maintaining a revolutionary aura in a mature market.

Truth No. 4: The legacy of Steve Jobs is haunting the company.

Steve Jobs’s death in 2011 led to speculation about whether Apple’s extraordinary market dominance could be sustained. Remarkably, the stock continued to rise for a time, but the post-Jobs slump is now evident. The company’s success was intertwined with Jobs’s unique vision—his ability to conceive groundbreaking products and inspire consumer anticipation. His absence has created a void, and while Tim Cook has maintained the company's profitability, the cultural and innovative aura associated with Jobs has diminished.

Moreover, internal changes—like the ousting of Scott Forstall, Apple's former senior executive responsible for mobile software—signal a shift. The halo effect around Apple has faded, raising questions about whether the company can continue creating revolutionary products without its founding innovator. Investors and consumers are increasingly uncertain about the company's future direction, which affects overall confidence and valuation.

Truth No. 5: Apple won't give up the magic without a fight.

Despite challenges, Apple remains committed to cultivating an aura of secrecy and anticipation, much like in the Steve Jobs era. Secrecy has been a strategic tool to generate hype and control expectations. However, in the absence of Jobs’s legendary secrecy, competitors like Google have adopted more open strategies, offering teasers to sustain interest without promising immediate delivery.

Google's openness about projects like Google Glass and autonomous vehicles contrasts with Apple's tight-lipped approach. This transparency helps manage expectations and prevents bitter disappointment. The critical question for Apple is whether it can continue to surprise and delight consumers with innovations, or if it will settle into a more ordinary, predictable role. The stakes are high—if Apple relinquishes its exceptional status, it risks losing its brand mystique and market influence.

The transition from revolutionary innovator to a more cautious, iterative innovator would require Apple to adapt its culture and strategy. Success hinges on its ability to produce unexpected, compelling products that redefine markets again. Whether Apple can sustain its legendary innovation remains uncertain, but the company's history suggests a resilient capacity for reinvention. Consumers and investors alike will be holding their breath, waiting for the next big thing.

Conclusion

Apple’s journey illustrates that its success is rooted in careful, incremental innovation, a highly emotional brand, and a culture of secrecy. While this formula has made it one of the most valuable companies in history, it also imposes limitations—raising high expectations that are difficult to meet consistently. Post-Jobs, the company faces the challenge of maintaining its innovative spirit and mystique in an increasingly competitive landscape. The future of Apple will depend on its ability to continue surprising the world, perhaps with yet another revolutionary product or a renewed commitment to groundbreaking innovation.

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