Apple Inc. (AAPL) Regains Its Mobile Competitive Edge

With iOS 7, Apple has been able to catch up with its rivals in important features, while maintaining its intuitive ease of use and reliability at the OS and app level.  In features, it’s ahead of Windows Phone, and in reliability and stability it’s still ahead of Android.  (I’ve discussed Android’s technical deficiencies in “The Problem with Android.”)  Having the best mobile OS should confer some advantage in the Mobile Device Wars, yet investors staged a minor walk-out on Apple once the keynote was over.  Why?

I think the mind-set among investors is that Apple needs to introduce either some new product category such as the iTV or the iWatch, or Apple Inc. (NASDAQ:AAPL) needs to introduce a larger variety of iPhones, including a larger screen deluxe model as well as a low cost model targeted at emerging markets.  Apple didn’t do any of those things at WWDC.

I basically agree that Apple needs to roll out new products faster, which is why I advocated doubling Apple’s IR&D spending in “The Case for Lower Apple Margins.” This has brought me into conflict with numerous Apple Inc. (NASDAQ:AAPL) fans who, believing that nothing about Apple should change, found themselves having to argue that it was somehow not a good idea for Apple to spend more for innovation.  With each passing month, the case for greater R&D spending becomes more self-evident.

However, I would counsel some patience on the part of Apple investors. Clearly, the roll out of iOS 7 in the Fall is timed to coincide with new iOS devices, and the underlying changes to iOS suggest great new products in addition to the expected iPhone and iPad refreshes.

Mark Hibben has a position in Apple. The Motley Fool recommends Apple and Google. The Motley Fool owns shares of Apple, Google, and Microsoft.

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