Is Apple Inc. (AAPL) Still Innovating?

Comparisons with Apple’s major competitors

Apple Inc. (NASDAQ:AAPL) remains dominant in the smartphone and tablet markets. However, it faces serious competition from Samsung, which had year-over-year growth in the tablet market of 282.6%, compared to Apple’s 65.3% year-over-year tablet growth. Samsung also has a substantial, and growing, smartphone market share.

Compared with Apple, it must be noted that much of Samsung’s smartphone revenue is generated from low-end Android smartphones, and some of its cheapest tablets can be brought for less than $300. I believe Samsung will face increased competition from numerous cheaper, local manufacturers, and it is still completely unforeseeable for Samsung to overtake Apple in the higher-end market for smartphones or tablets in the near future.

Also, given Apple’s history of innovating and coming out with exciting new products first (and taking into account their increased R&D spending), I hold more hope for Apple Inc. (NASDAQ:AAPL) to develop something exciting in the near future than Samsung. Samsung may represent a reasonably solid investment, and the company fundamentals are healthy, but it’s highly unlikely for explosive growth to occur in 2013, and I still regard Apple as a far more exciting company.

Interestingly, Microsoft Corporation (NASDAQ:MSFT) has also ventured into Apple’s space in the smartphone and tablet markets, but has (so far) failed to gain any meaningful market share. Its new operating system (Windows 8) has also not been particularly well received.

However, its recent earnings were still strong, and given that Microsoft’s move into the tablet market has been very recent, I believe there is plenty of room for growth. Microsoft Corporation (NASDAQ:MSFT)’s stock is also currently trading around an attractive 52-week high and I believe the potential is there for a further move up closer to $40 within 2013.

Final thoughts

I believe it’s far too early to claim that Apple Inc. (NASDAQ:AAPL) has “stopped innovating” based on the fact that revenue declined last quarter and it’s been some time since its latest product launch. The real answer to the question of whether Apple is still innovating heavily remains to be seen.

Apple’s management surely realizes that new product lines and upgrades are essential for growth, and the fact that R&D spending is higher than ever leads me to believe that we will see some exciting new products from Apple announced in future. Investors just need to remain patient to see what is announced during WWDC and beyond.

The article Is Apple Still Innovating? originally appeared on Fool.com and is written by John Smith.

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