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What Apple CEO Tim Cook Means When He Promises iPad Innovation

NEW YORK (TheStreet) -- On July 22, during Apple's (AAPL - Get Report) third-quarter earnings report, CEO Tim Cook responded to a question by Bill Schope of Goldman Sachs about the long-term market for the iPad, competitive landscape, and the next driver for renewed growth.

Cook said: "We feel that there is significant innovation that can be brought."

On hearing that, it's easy to jump to conclusions. It's always tempting to think in the short term, with high hopes, even when an Apple CEO is talking about the long-term competitive landscape. Cook often speaks in a code that must be interpreted. I'll try to explain.

Mini Leaps and Micro Bounds

As we've seen, iPad technology development has moved along incrementally, and so Cook is really suggesting that significant innovation will take time. Apple's powerful ability to develop technology incrementally will accumulate and pay off in the long run.

That notion goes a long way towards explaining the relatively mild improvements observers are expecting for what's being called the "iPad Air 2." For example, John Brownlee at Cult of Mac recently wrote, concerning some leaked photos:

Otherwise, the iPad Air 2 looks like it will look nearly identicaly to its predecessor, which is not much of a surprise: at a minimum, Apple generally only redesigns the physical look of its devices substantially every two years. The earliest we can expect a radical iPad Air redesign is 2015."

The point here is that when we finally see the iPad Air 2, with incremental improvements, we shouldn't reel back in horror that it is incapable of striking a mortal, technical blow to the competition. What's important is the additive effect of gradual innovations over the long term -- when done right.

The Drool Factor

What's more important than whether any single feature makes it into the blend is the aggregate effect. Does the sum of the features make the iPad Air 2 attractive enough that customers with older models will be moved to upgrade? Is the drool factor satisfactory? Given the current product mix in the field and the features of the new model, is a global customer embrace to be expected? Apple has a knack for gauging those effects.

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