WWDC set the stage. Now Apple needs to deliver

Apple's Worldwide Developer Conference offered iOS and OS X software features that help secure its ecosystem. But products remain a question mark.

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Apple CEO Tim Cook prepares to take the stage at the company's Worldwide Developer Conference. Tim Stevens/CNET
So with the weight of such lofty expectations upon him, did Apple CEO Tim Cook deliver?

Not yet.

The keynote of Apple's Worldwide Developer Conference came and went on Monday without a single mention of a new hardware product. While that itself isn't a huge surprise -- as its name suggests, the event is largely for developers, so a focus on software makes sense -- it only ups the ante and suggests a potential flurry of announcements in the second half.

You could be forgiven for expecting something. Cook promised several times over the past year that Apple would enter "exciting new product categories" in 2014. Last week, Eddy Cue, head of iTunes and the man behind Apple's $3 billion acquisition of headphone and streaming service Beats, upped the pressure by boasting that the consumer electronics giant is working on its "best product pipeline in 25 years."

Apple still needs to prove it has that magic touch. It may have transformed the smartphone business with the iPhone and the tablet business with the iPad, but its last shakeup came four years ago with the original iPad. With earnings and sales growth slowing and a feeling of lethargy building, investors and fanboys alike have been waiting for the next revolutionary product that will provide a new leg of growth.

Unfortunately, unless you're a developer, there was nothing groundbreaking to be found at WWDC. "We came away relatively disappointed," Macquarie analyst Ben Schachter noted. "While we did not expect major new product initiatives, the mostly incremental improvements announced were underwhelming."

Apple shares rose $5.30, or 0.85 percent, to $634 Tuesday after falling $4.35, or 0.7 percent, yesterday.

The Cupertino, Calif., company on Monday unveiled iOS 8, its latest mobile operating system and its desktop-based Mac OS X Yosemite, but most of the additions are minor. On the mobile end, many features are already available on Android, and even BlackBerry and Windows Phone. It introduced new health and smart home programs, but spent so little time on them that one has to wonder how big of a push Apple will make.

Apple also debuted a new programming language, called Swift, that, while important to developers, is something consumers likely will never know or care about.

"It's like we're at a conference where people are talking about cement, and we want to see skyscrapers," said Horace Dediu, an analyst with Asymco. "Everybody knows if you have great material, great foundations, you're going to have better buildings...[but] it's hard to get excited about building materials."

Apple didn't release any new hardware at WWDC, but expectations were fairly low. And while Apple's "exciting new products" don't have to be gadgets, nothing shown during the keynote Monday really lives up to that promise -- at least not now. What Apple needs are items that can attract high numbers of users and eventually become big new markets for Apple.

Under Cook, who took charge three months before Steve Jobs' death in 2011, Apple's earnings and sales growth have slowed in part because it has largely leaned on incremental improvements to its core franchises -- the iPhone and iPad together account for three-quarters of sales.

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Cook's presentation style greatly differs from that of Jobs, who was known for his dynamic, suspense-filled orations. Often times, Cook simply opens and closes events, offering a few comments in between. On Monday, Cook was virtually an afterthought as Craig Federighi, senior vice president of software for Apple, dominated much of the proceedings in an entertaining, informative presentation.

That Federighi spent so much time on stage isn't a surprise, given the software-centric nature of the show. WWDC is all about developers, and this time around, it was also about laying the foundation for bigger products in the future. Along with health and the smart home, Apple also highlighted its features that connect all of its devices together. For instance, Handoff allows a user to start composing an email on an iPhone and then switch to a Mac to finish the message. And Apple's iCloud Photo Library automatically backs up all of a user's photos and syncs them with other devices.

The features tying multiple Apple products together aren't done purely for convenience reasons; the company wants to make it irresistible for consumers who already own an iPhone to also snag an iPad or MacBook. The iOS and OS X additions are part of the company's push to build its ecosystem, keeping current Apple device users loyal to the operating system and potentially attracting new users fed up with their Android or Windows devices.

Apple may build the most cohesive operating systems and apps in the world, but it still needs flashy new devices to capture consumer attention. Software features keep users in an ecosystem, but consumers often are first attracted to a device's hardware. You buy an iPhone, not its iOS software, no matter the tricks.

Apple has doubtlessly not forgotten that, and could be setting itself up for a wild end of the year.


 

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