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Why Apple's 2014 won't be like 2013

It's not just about the next hit product. Apple is preparing for a future beyond phones, tablets, watches and TVs, in which it's the premium brand for life in a fully digital age.

Hundreds of people await the iPhone 5S and 5C launch at Apple's Fifth Avenue store in Manhattan.
Hundreds of people await the iPhone 5S and 5C launch at Apple's Fifth Avenue store in Manhattan.
Sarah Tew/CNET

As 2013 draws to a close, Tim Cook is feeling good. The holiday quarter once again proved that Apple's products and stores can draw a crowd. Pent-up demand for new iPhones and iPads was satisfied once again, and Apple's reputation as a purveyor of objects of desire was reaffirmed. As a reward, Apple' stock price hit a 52-week high this month.

Apple's precision-engineered, meticulously designed, mass-produced objects of desire are not the most advanced or clever computing machines. Many Android devices are tricked out with more pixels and features. Nor is Apple the undisputed market share leader, which is not the company's first priority.

After its initial breakthrough product and domination of the market, Apple cedes share to followers and carves out a highly profitable niche. Like BMW in the automotive industry, Apple is not trying to blanket the market. The Android platform now maintains the majority market share by far, especially outside the US, but for contestants other than Samsung the profits are slim or none. And, Apple's mobile platform, iOS, accounts for more than 50 percent of mobile Internet usage, according to Net Market Share research.

Mobile and tablet worldwide market share of operating system usage for November 2013. Net Market Share collects browser data from a worldwide network of over 40,000 websites. (Credit: Net Market Share)

In the coming year, Apple will continue its wash, rinse, repeat cycle, incrementally refreshing the iPads, iPhones, and Macs with more speed, less weight, longer battery life, additional sensors, and improved apps.

There are also hints that 2014 won't be another year of just incremental improvements like 2013. Apple could reveal something more dramatic and groundbreaking than adding a fingerprint sensor to an iPad or delivering iPhones and iPads with bigger screens and better cameras, or finally shipping the powerful R2-D2- looking Mac Pro.

It's been four years since the company's last market-defining product, the iPad, was unveiled. Here's what Steve Jobs said at the time: "iPad is our most advanced technology in a magical and revolutionary device at an unbelievable price. iPad creates and defines an entirely new category of devices that will connect users with their apps and content in a much more intimate, intuitive and fun way than ever before."

Apple is rumored to be working on several products that could be eventually pitched as the "most advanced technology in a magical and revolutionary device at an unbelievable price." According to reports, Apple has in excess of 100 people working on an "iWatch." The company has trademarked the iWatch namearound the world, and has filed 79 patents containing the word "wrist."

Neptune's Pine is among the upstarts trying to lead the next wave of wearable computing. (Credit: Neptune)

Following its usual product strategy, Apple isn't rushing to market to join the pack. Pebble, Samsung, Sony, ZTE, Martian Fitbit, Basis, Neptune, Metawatch, Qualcomm already have wrist wearables in the market, and LG, Google, and even Dell might be working on similar products. No one so far has a hit product. Apple hopes that an iWatch can follow the same pattern as the iPod, iPhone and iPad -- not the first in its category, but the one that redefines a market and dominates it for the first phase of adoption.

That will be a far more difficult challenge than in the past with all the innovative startups chasing the dream. And, the bar is set much higher for Apple.

It may be that an iWatch will focus on a few apps, such as health and fitness, and serve as more of an accessory to the iPhone. You don't have to take it out of your pocket to browse alerts and other information or talk to Siri. An iWatch with a beautifully curved, sapphire touch screen and sleek band would be more fashion statement than game-changing product.

In fact, Apple is on a mission to become more fashion forward. The company added two major fashion industry icons to its executive ranks. Former Yves Saint Laurent CEOPaul Deneve joined as a vice president to work on "special projects," and Burberry CEO Angela Ahrendts was tapped to lead retail operations, managing the online store and more than 520 brick-and-mortar outlets.

Apple TV user interface concept. Andrew Ambrosino

That enhanced fashion IQ could be applied to a range of entertainment products, another area that Apple wants to transform. The company could launch a stylish, large-screen 4K TV with Apple TV built-in or a set-top box this year, accompanied by apps that plug into iOS ecosystem and take the pain out of managing and controlling what's on the screen or in the box.

Apple is also working with automobile companies to integrate features like Siri, Apple Maps, and iTunes into the built-in displays of cars.

One Apple patent describes a head-mounted goggle system for providing a personal media viewing experience. The goggles could be linked to a devices, such as computers, televisions, smartphones, and gaming systems. USPTO

And, don't be surprised is you start hearing rumblings about eyewear from Apple. The company has many patents for head-mounted displays and other technologies relevant to augmenting-reality devices like the Oculus Rift and Google Glass. Apple will play the tortoise to Google's hare, watching the landscape evolve and taking its time to create a more perfect device that will attract tens of millions of buyers.

What's becoming clear is that Apple isn't just focused on trying to create another hit product. The company has long been preparing for a future in which technology is deeply woven into the fabric of everyday life. It's about creating an experience and brand that represents the best of the digital future.

iPhones, tablets, watches, glasses, TVs, sensors, robots, and cars are vehicles for enabling Apple's software and services to flourish. It's about becoming the premium brand for living in a fully digital age, in which billions of people and tens of billions of objects gathering and sending signals are connected.

Apple is skating to where it believes the puck is going to be. It's a space in which Apple's software, hardware, services and ecosystem serve as the premium platform for the digital age. Dan Farber

What might be dubbed "Apple Everywhere" is a continuation of Steve Jobs' goal to reshape how masses of humans use and interact with technology. "It's in Apple's DNA that technology alone is not enough. It's technology married with liberal arts, humanities that yields us the result that makes our heart sing. And nowhere is that more true than in these post-PC devices," Jobs said during the unveiling of the iPad 2 in March 2011.

In a recent promo video, Apple described its product development ethos:

This is it. This is what matters. The experience of a product. How will it make someone feel? Will it make life better? Does it deserve to exist? We spend a lot of time on a few great things...until every idea we touch...enhances each life it touches. You may rarely look at it...but you'll always feel it. This is our signature...and it means everything.

The words uttered in a sonorous voice are by far too contrived and precious, but of all the tech companies Apple invests the most in the overall product experience, creating an emotional connection between its brand and customers.

Jobs was also fond of a quote from hockey great Wayne Gretzky. "There's an old Wayne Gretzky quote that I love. 'I skate to where the puck is going to be, not where it has been.' And we've always tried to do that at Apple. Since the very very beginning. And we always will," he said at the Macworld Conference in January 2007.

Now the technology puck is rapidly careening toward deeply personalized and wearable computing. With its growing retail presence and the increasing population of always connected people, Apple is combining its roots in humanizing technology -- making it more personal and invisible -- with a more acute sense of fashion to lure the discriminating, less price-sensitive buyers and those who aspire to be part of the club.

In the future Apple world of iBeacons and ambient intelligence, your fashionable wearable wrist device, eyewear, phone, tablet, TV, car interface, and clothing could be used to control your thermostat, lights, DVR, car, heart monitor, payments, music, movies or anything that connects into the global network. You tell your iPhone, iPad, iWatch, iGlass3D or iLens, "Ok Siri, unlock my car door, drive me home, turn the thermostat down to 62, record the news, turn on the oven to 375 degrees and tell my mother I will call her back tomorrow." Or you project a virtual control pad in front of you and use hand gestures to reset the thermostat or open your car the door as you approach it.

Apple isn't the only company trying to become the operating system for 21st century. Google in particular, along with Microsoft and others hidden away in garages and research labs, are vying to become the computing platform that the runs the digital lives of others.

Competitors have so far failed to match the values associated with Apple's brand, or its profit margins. Even Macintosh desktops and laptops generate the majority of profit among the players in the PC category, despite a 10 percent share of market.

However, the shift to mobile, wearable, augmented reality computing is just at its beginning. It's a new world and Apple's reign as a market maker and arbiter of good taste could be toppled. For that reason, the pressure is on Apple to make sure that 2014 has something more to keep its devoted fans in the fold than another cycle of upgrades.