Apple CEO Tim Cook spent 2013 fighting creeping concerns that the company has lost its innovation edge and hinting about new products that will take the Silicon Valley giant into exciting new categories. 2014 is the year he has to deliver, according to investors and analysts.
While it was going to be impossible to replace the creative genius of Steve Jobs, Cook is increasingly seen as a smart operations leader, rather than a creative innovator.
Without compelling new products in big new markets next year, worries will grow that Apple's days as a hot growth company are over, limiting future gains for the shares.
"People are questioning Cook's status as a leader of an innovative company. Maybe he's just a great operator," said Josh Stewart, portfolio manager at the Wasatch World Innovators Fund, who sold his Apple shares earlier this year.
When Jobs died Oct. 5, 2011, there were initial questions about Cook's ability to replace the co-founder, but Stewart disagreed because Apple had a long growth runway in tablets, the iPhone was a hot product and they had a pipeline of other products in development.
"That was more than two years ago, and there's been nothing else so far," Stewart added. "I got frustrated and moved on."
Such worry even prompted one analyst to suggest Apple should buy electric car company Tesla Motors, partly because CEO Elon Musk is considered more capable of driving future innovation.
Apple spokesman Steve Dowling declined to comment, as did a spokeswoman from Tesla.
Stewart's fund invests in companies that are gaining big market share from legacy companies through innovative new products. And Apple is now losing share in the tablet and smartphone markets, mainly to devices running on Google's Android mobile operating system.
"2014 will be hard," Stewart added. "Unless they come up with something we haven't thought of yet, it will be hard to drive double-digit sales growth from here."
NEW PRODUCT CATEGORIES
Apple introduced the iPod in October 2001, revolutionizing music consumption. The iPhone came out in January 2007 and quickly dominated the lucrative high end of the mobile phone industry. The iPad came three years later, creating a new category that is still eating into the huge PC sector.
Since then, the company has updated existing products with cutting-edge technology, but Apple has not launched a new product in a big new category.
In April, Cook dropped a big hint during a conference call with analysts, saying "amazing new hardware, software, and services" would be introduced in the fall and through 2014. (continued...)
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