Apple Inc. (AAPL), Google Inc (GOOG) – Big Tech Boys: Even Innovation Needs Iterations

While history of outstanding performance is definitely in favor of Apple, the effect of last few quarters has cast a serious doubt in the minds of investors about its ability to continuously innovate and maintain its pricing power. There are suggestions and reports that it may change its stance as a niche market player to compete in other cost-sensitive markets with lower price products (lower margins).

However, such a change in stance is fraught with dangers of brand image dilution, which may leave it in a confused state of positioning. These changes in marketing have to be done extremely carefully, otherwise they may benefit competitors more than the company itself.

So, the best course for Apple would be to come out with classy, nearly disruptive technology products which can invigorate the growth story for another historical leg. In the last one year, nothing new has come up, and nothing remarkable is expected in the near future. Investors may have to wait for the management commentary with the Q2’13 results before making any substantial investment.

About Google, its advertising revenue motives are clear. It has or is developing the ammunition to take on Apple and others. The new Nexus, X-Phone/Tablets and, of course, the upcoming Google Glass “digital eyewear” are all created and programmed to enhance its revenue.

Though its margins have fallen, it has innovative, high margin products in the pipeline. However, there is some talk about its falling apart with Samsung as it (Samsung) is coming out with its own operating system, Tizen. Still, considering the overall picture, Google has the most balanced risk-reward ratio.

BlackBerry, is buoyant with its new operating system, and is geared up to take on the weakening might of the competition. However, one or two quarters cannot make investors “consider it done.” Its products have to perform, and it has to continuously iterate its innovation. BlackBerry is, therefore, a high risk-high reward bet right now.

All said and done, one can not write off Apple. It has the might and the immediate need to come out with that one spectacular product, which can turn the tables again. It has to do it soon, otherwise this fight may go out of hand. It all boils down to innovation.

(Source: All data and charts have been sourced from Google finance, Yahoo finance & websites of the respective companies.)

The article Big Tech Boys: Even Innovation Needs Iterations originally appeared on Fool.com is written by Naomi Warmate-Igwe.