This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

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.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $112.12 2.39%
FB $93.24 0.83%
GOOG $643.61 0.70%
TSLA $220.69 -2.66%
YHOO $32.52 0.46%


Chart of I:DJI
DOW 17,084.49 +33.74 0.20%
S&P 500 2,013.43 +15.91 0.80%
NASDAQ 4,830.47 +19.6820 0.41%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs