Apple's Perennial Upgrades: Will They Satisfy Consumers Forever?

When the iPhone was unveiled, it was immediately apparent that Apple Inc. AAPL was onto something special. The sleek design and gorgeous screen were marginal marvels compared to the device's biggest innovation: its remarkable, ultra-sensitive touch screen. For the first time ever, people could surf the web, flip through virtual photo albums, and reduce and expand their images with unprecedented control. The iPhone wasn't merely another touch screen. The device was sensitive enough to detect a finger pinch. It didn't require a stylus, and it was the first phone to offer a reliable on-screen keyboard. It blew the competition out of the water, making the initial $600 price tag a little easier to swallow. Though the iPhone is arguably the most innovative device Apple has produced in the past few years, the company continued to flourish with the launch of the App Store. This brilliant marketplace opened the iPhone to countless application developers from all over the world. Together, they have made the iPhone more productive, more exciting, and more fun. But beyond these two notable moments in AAPL's illustrious career, the company hasn't continued to offer the innovation people expect. Case in point: while the iPad has been successful at retail, it is not much more than a large iPod Touch. For the starting price of $500, only the most loyal Apple fans have been eager to make a purchase. Meanwhile, the iPhone has had several (small) updates, the latest being the over-hyped FaceTime, which allows users to see each other while calling from a Wi-Fi connection. Yes, the screen has gotten brighter and more detailed. Yes, you can use multiple apps at the same time. Yes, it records HD video. These are all lovely features. But if you've already purchased an iPhone (or several), how much are these features really worth? And how much will they be worth when Apple improves upon them with another iPhone next year? The same can be said for the upgrades of Apple's computers. Instead of bringing touch screen brilliance to MacBooks everywhere, Apple's latest announcement brought forth the new MacBook Air – a thinner and more powerful version of its predecessor. While this might be great for the potential MacBook Air consumer who loved the original but thought it was too expensive and much too slow, it perpetuates the fear that Apple is moving away from innovation. It also reinforces the belief that while Apple may still be capable of producing the best new devices on the planet, the company is all too content to milk the current offerings. Will consumers ever tire of marginal advancements? Right now, it appears that Apple has enough diehard fans to produce high sales of whatever upgrades it chooses to release. But if the company keeps this up, the day may come when those fans start to reconsider their loyalty. If that happens, you can bet that Microsoft Corporation MSFT and Google, Inc. GOOG will be eager to show them a few replacements.