NEW YORK (TheStreet) -- Shares of Apple (AAPL) - Get Report are rising this week off of better than expected 2016 third quarter earnings that were released Tuesday, but there is still concern that the company's innovation is in a rut and needs a big change, CNBC's Kelly Evans reported on "Closing Bell" Friday. 

A solution is to essentially license the company's iOS software to other devices, Carnegie Mellon University professor Vivek Wadhwa's told CNBC.

Facebook (FB) and Alphabet's Google (GOOGL), Wadhwa says, are both taking over the markets because they're going after billions of users.

Apple's market is limited and getting smaller because the company is focused on hardware, he said.

"The beauty of what they have is their software and if they open sourced iOS and made it available on Samsung, HTC, show me the phones, they would be adding hundreds of millions of users," Wadhwa said.

The only bright stop on Apple's earnings report was its subscription and service revenues, he added.

If Apple shared its software, he says it could own a decent share of a large market instead of dominating a small market.

The company would have to work with vendors to allow iOS to operate on its hardware just as it does on Apple's hardware, which shouldn't be difficult, he noted.

Apple cannot win the game of hardware because they will become too commoditized but the company does have a chance of succeeding in the service and software business. That is where the money is for Apple, he explained.

"Every time they sell a device they have to manufacture it and takes months to get there. The beauty of software and subscriptions is it could go viral. It is the market that Apple is missing out on trying to keep everything closed," Wadhwa said.

Shares of Apple closed down by 0.14% to $104.19 on Friday. 

(Apple is a core holding of Jim Cramer's charitable trust Action Alerts PLUS. See all of his holding with a free trial here.)

Separately, TheStreet Ratings team set this stock as a "buy" with a ratings score of B. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, expanding profit margins and notable return on equity. TheStreet Ratings team feels its strengths outweigh the fact that the company has had lackluster performance in the stock itself.

TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. 

You can view the full analysis from the report here: AAPL

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