[alpha1]

Originally Posted by Samurai

Oh, the simple answer is they are content right now.

I wouldn't call it being content, but the problem is that executives are busy saving their positions with their short term objectives of increasing profitability.

And the shareholders (mistakenly referred to as owners)? Hah, the less I talk the better.

That is because innovation comes at a great cost, generally known as R&D cost. And the management can often come up with reasons to reduce R&D, in order to improve short term profits, to boost the stock prices and their bonuses.

Great innovations are also associated with spectacular failures. No gain without pain. It could be as high as 90% failures, in the hope that the 10% will blow away the competition.

... who just wants to keep shareholders happy. There is no fight or hunger for defining the future ...

All great points, and the ones that explain the systemic problem of large corporations where "ownership" is spread among multiple shareholders who are in for the short term gains only.

What one requires is a pioneering executive leadership who has the vision of the future, and who has the mettle to take the bull ("owners") by the horn - because the owners are clueless here.

[Samurai]

Originally Posted by alpha1

I wouldn't call it being content, but the problem is that executives are busy saving their positions with their short term objectives of increasing profitability.

That's what I call being content. Innovative companies should always be working on the next big product. They shouldn't be happy milking their cash cows alone.

Originally Posted by alpha1

ones that explain the systemic problem of large corporations where "ownership" is spread among multiple shareholders who are in for the short term gains only.

Exactly... that is why I have very little regard for the stock market. It is a great financing tool, and then it goes downhill.

[SmartCat]

Warren Buffett has urged CEOs and corporations to stop thinking about short term profitability to please shareholders.

https://www.cnbc.com/2018/06/06/warr...forecasts.html

Executives often feel pressure to make quarterly forecasts, but it can often put a company in a position where management from the CEO down feels obligated to deliver earnings and therefore may do things that they wouldn't otherwise have done.

You should build the systems you need, you should do the R&D that you need and explain it to your shareholders and your board. When companies get where they're sort of living by so-called making the numbers, they do a lot of things that really are counter to the long-term interests of the business

Michael Dell once said he delisted Dell from the stock exchanges because he couldn't be bothered with answering questions of analysts and institutional investors about his long term plans. Taking the company private allowed him to change the course of the company, without shareholders breathing down his neck.

[Palaver]

Completely agree with GTO, both Honda and Apple seem to be basking in the glory of their past achievements. Having bought 2 Honda City's over the last 10 years, I can vouch for the fact that the quality of the new one is far below than the old Honda City. And this is very noticeable in the way the car has aged. All the materials seems to suffer from an unusually high signs of wear and tear that is just beyond me. I guess they seem to think they can get away with this quality since people would just blindly buy their products. City which was once the class leader, is probably dethroned now. Although I wonder if someone has the exact figures on this. I would be very surprised if they are still number 1.

[Jeroen]

Well, I think Apple is still prett innovative. You just need to look beyond the obvious such as iphone and laptop and itunes. Their watches are outselling the entire Swiss watch industry! And the volumes are increasing yoy at a staggering pace.

https://www.businessinsider.com/appl...true&r=US&IR=T

Although Apple doesnt disclose specific numbers on it's watches they are expected to sell more than 20 million units this year (2018). Which effectively makes them one of the largest watch makers in the world!

So when you think about Apple, it is not only about iphone, ipad and mac's but all of sudden they are in the space of literally a few years, a huge force and dominant market player in the Global Watch industry / Market.

If that isn't innovation, what is?

I have an Apple watch and I must admit I prefer all my other watches. But I do use it for when I'm working out on my bicycle or running.

Jeroen

[msdivy]

Earlier, Apple had Jobs, an innovator as CEO. Tim Cook was the executioner, who got everything to market at the quality what the innovator wanted. Now the executioner is at the helm. Cook has done extremely well from Wall Steet point of view . True, not many new products being introduced. They are into self-driving cars. They have huge cash reserves. Have to see what they make of it.

Originally Posted by Ford5

Honda scoffed at petrol Direct injection & turbo's and Dsg's.

It is Honda India which has lost the plot. They expect a high premium for their regular cars. They expect snob value of German cars for their cars which compete with Maruti/Hyundai. So far they are failing. They on the brink of ending up like Ford, who is a one-trick pony.

[Nav-i-gator]

I have a different perspective to this too (in addition to the reasons listed above). It has to do with consumers too.

When a company (like Honda & Apple) develop loyalty (read fanboys) from the customers, the innovation suffers. Because, when the consumers converting from other brands are much lesser than the repeat buyers (again, read fanboys), consumers start comparing the products across generations rather than across brands/companies (2nd gen city was better than the 3rd gen, latest gen is the worst. Or, Iphone4/ Iphone6 was the best apple ever produced etc). Companies find it hard to innovate then, for the fear of unruffling their large loyal fan base. Keep selling what sells/what our loyalists are happy with.

It's not that apple has lost the desire for innovation, it's the need for innovation from their own fan base (which keep on buying anything having a half eaten apple logo on it), just because it is an apple. Same is with Honda, in India. The Ivtec is good, but not THAT good anymore (as compared to some quite good engines from other manufacturers nowadays) to command the kind of sales the current medicore city still does.

The (good) thing, at least for Honda, in India is - they are probably looking at 5th/6th spot in the market share, which is likely to be < 1% if they do not change, for good.

Apple is yet to get there in near future- a fight to be relevant in the market. They have got an incredibly loyal fans who are willing to forego a significant part of their incomes for the perceived value of the half eaten fruit, year after year (notch or no-notch).

[emkay.india]

No comments about Honda as I've never owned one but just by reading the reviews of Honda cars I could understand that overall quality and feature-to-price ratio has come down.

Coming to Apple. Well, extreme_torque has excellently explained the innovations of Apple that would clear any and all doubts. It's always not about what we see but also about what we don't see (internals). Consider the logic board of Macbook - lesser than the size of a pencil and lesser in area than a raspberry pi.

https://www.reddit.com/r/pcmasterrac...k_motherboard/

And everyone seem to be stopping after mentioning iPhone and iPad, very conveniently leaving out the Apple Watch and Airpods and the upcoming Airmat - which can charge an iPhone, Apple Watch and Airpods simultaneously which require different amount of current to be supplied. All these are controlled by an Apple designed chip and a stripped down iOS. Beat that!

Still, in literal sense, Apple never invented anything. They took an already existing product and made it the best in the market.

And if Warren Buffet is investing so large in Apple it's not for no reason.

https://money.cnn.com/2018/05/04/inv...-apple-shares/

[karan10]

As an Apple fanboy from the getgo, I wholeheartedly agree. There was a time when Apple phone were treated as the pinnacle of evolution, however, off late the feeling isn't the same. So much so, that it's hard to find a replacement to my current phone.

However, that being said, there is one major difference in the way Honda and Apple have gone down, brand loyalty. Honda's brand loyalty has decreased in the past couple of years (speaking from personal experience and certain level of observation).

When we talk about Apple, though, it has a very different strategy to maintain brand loyalty. Back in our B-School there was a HBS case study where they examined the loyalists of the iPhone. What they found was that a major portion of the loyalists are loyal to apple because they were 'trapped' in the ecosystem. This can be called as an inorganic form of loyalty.

I think we can underplay the role of innovation to a certain extent for Apple and still not see a decline in revenue growth. This is what has been happening as a phenomenon in the last few years. With Honda? You better gear up guys, Hyundai and Maruti Suzuki have caught up, and there will be bloodshed.

[PrideRed]

Barring very few niche areas like say nuke capability, launching space crafts, In majority of other area, tech advantage is a myth. Take automobile industry for that matter, none of current companies have significant tech advantage over other. Even if they do, competitors are fast enough to catch up. Most of advantages some companies are reaping is because of their past legacy. Toyota were known to be gold standard when it comes to reliability, now almost all manufacturers offer similar reliability. Iphone was a pioneer then, but now a a 10 year old company Vivo offers all tech offered by Iphone. Well, people still prefer Iphone- Why? Past legacy.

To me one thing is clear, you cannot sit on your past legacy for long. Its okay for competitor to catch up, but you need to innovate and have first mover advantage. Back then you could probably sit high with past legacy for 8-10 years, now I don't think any company can do that for more than 3-4 years.

[avira_tk]

I'm not sure where this thread is headed, but Apple still pulls in 90% of the industry's profit in cellphones. They have a customer base that is willing to pay the premium and apple has been consistent with the way it has used customer data. Unlike the other OS, one I'm using right now, you're not the product. Apple never cares about being pioneers, but they make sure their implementation is among the best. Apple pay is one such program, it's been implemented without the breadcrumb trail that most payment systems come with, the security is because apple has no interest in the user's data.

Apple isn't affordable for the vast majority, the only way to stay premium is to make your product desirable not generic and easily replaceable. This is the mistake Honda made by going down market, what is the USP of any Honda product on the brio platform, a reminder that you couldn't afford anything better? The iPhone is still the king of the hill, I'll dump Android the instant I can get my hands on one.

[Jaggu]

And both companies have steadily raised their pricing without any logic or rhyme. Am sure this would add to the dooms day predictions

I love apple but as many here have said, they have lost the edge with innovation and VFM while keeping the aspiration intact. Too much focus on profits and shareholder interests are taking it's toll i guess.

[kevintomin]

For me it is the visionary leadership that makes the difference. Apple had Steve Jobs and now Jeff Bezos is making the difference for Amazon. Both Jobs and Bezos were spot on in identifying the next big opportunity and not being a follower.

[Jeroen]

Apple just released their Q2 financial report:

This is a good summary:

https://www.apple.com/newsroom/pdfs/...ta_Summary.pdf

To my earlier point, if you only rate a company on how long they can repeat the same trick (a better iphone, a better Mac every so often) and call that innovation, you are overlooking the fact that this company is in a very fast transformation. Look at the Services and other product sales. So maybe, we are seeing a bottoming out on innovation on the iphone. We have another thread where similar sentiments are being shared. I certainly don't see any reason to upgrade from my 3-4 year old iPhone 6S.

But here is a company that is still growing (financially) and breaking into complete new segments (wearables and services), despite their iphone and some other traditional products selling in smaller numbers. Soon, although I don't think Cook will ever use those words, iPhones will just be the proverbial cash cow. Steady stream of revenues and good margins, but the real money and margins to be will be coming from new areas and completely different products then what is being discussed traditionally.

The percentage revenue and the percentage growth is shifting towards services and "other products". That is no small feat for any company and in my thinking and definition that is very much innovation. Only not on the iphone or the Mac. And I'm very happy with my iphones and even with my 4-5 year old MacBook Pro. No reason to upgrade.

Jeroen

[arnieshwartz]

Originally Posted by GTO

Well, who would have ever thought a thread like this or a cheap dashboard like this in a Honda? IMHO, the company is a shadow of its former self today.

Oh, dear Lord! I had to look at the logo on the steering wheel in that image to be convinced it was indeed a Honda.

I sold my 10-year old Honda City ZX Gxi a year ago, and not a day goes by where I dont miss it. Never gave me trouble of any kind, despite eventually clocking 1L kilometers on the odo.