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Apple: What Can It Do Next?

NEW YORK ( TheStreet) -- It wouldn't be a day ending in "y" if an analyst didn't have an opinion on how Apple (AAPL - Get Report) could right some wrongs, now would it?

UBS analyst Steve Milunovich said he believes that Apple needs to go on the offensive shortly, as its margins and competitive advantage have been attacked by competitors, such as Samsung, Google (GOOG - Get Report) and others. Milunovich suggests that Apple needs to up the innovation output, or move into services, something CEO Tim Cook touched on during the most recent earnings call.

"Our teams are hard at work on some amazing new hardware, software, and services that we can't wait to introduce this fall and throughout 2014," Cook said.

When Steve Jobs died in October 2011, there was a concern that innovation was over at Apple. Cook was seen as an operations genius, but not the visionary that Jobs was. Even though Jobs is no longer there, the majority of Apple's executives are still in place. Names like Jony Ive, Phil Schiller, and Bob Mansfield still populate Apple's Web site. Critics might be underestimating Jobs' ability to create an Apple that lives on without him, with ideas such as Apple University.

Many are opining for Apple to offer a low-end iPhone, as Google's Android continues to dominate global market share in the smartphone industry. Milunovich believes Apple would be wise to offer a lower-cost option, to regain some momentum and capture some of the emerging market market share, including China, where Android is the No. 1 operating system.

"Apple's carefulness in introducing new products, while frustrating to investors, makes sense in the context of protecting the brand and creating long-term differentiation," Milunovich wrote in his report.

It's worth noting that according to comScore, Apple picked up market share in the U.S. from December 2012 to March 2013, so perhaps coming out with a low-cost iPhone isn't the be-all end-all it's cracked up to be.

Apple shares were higher in premarket trading on Monday, up 0.48% to $452.13.

-- Written by Chris Ciaccia in New York

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