Why Can't Apple Be More Like Taco Bell?
Aug 17th 2013 7:00PM
Updated Aug 17th 2013 7:02PM
Apple shares are finally starting to heat up, but it's Yum! Brands' Taco Bell that's getting Fiery.
Fiery Doritos Locos Tacos -- the latest installment in the wildly successful line of crunchy tacos served on Doritos-flavored shells -- hits the market on Thursday.
Taco Bell knows what it's doing. Comps at its domestic eateries soared 8% last year, and a major contributor was the Doritos Locos Tacos that were introduced in March. The original Nacho Cheese Doritos-flavored shells were a smash hit, so Taco Bell followed that up with Cool Ranch earlier this year. The spicier Fiery offering is now just days away from joining the growing product line.
Taco Bell has sold 600 million Doritos Locos Tacos since last year's rollout.
Now, Apple fans may very well be fuming right now. How dare I compare Apple to the haven of cheap and convenient fast food? If anything, Apple is Chipotle Mexican Grill. Its products are worth a little more, but there's a cult following where folks don't mind waiting in long lines for what they want.
Yes, I get that, but let's talk about innovation.
When Yum! Brands saw that it had a monster hit with the Nacho Cheese Doritos Locos Tacos, it didn't rest on its laurels. It hit the accelerator. It spun the flavor wheel. It reacted!
Apple has been methodically slow. That may have worked with the first iPhone in 2007 or the first iPad in 2010, but the annual updates with only marginally incremental enhancements no longer fly in this market. Everyone else seems to be moving faster, and that means that Apple's market share in both smartphones and tablets is shrinking.
Where's the Cool Ranch iPhone? Where's the Fiery iPad?
Chipotle sticks to its basic menu because it can. Comps are growing. The concept is expanding. A carnitas burrito or a barbacoa rice bowl is more popular now than ever. We can't say the same thing about Apple's iPad, where its share of the market -- measured by industry tracker IDC in terms of worldwide shipments this past quarter -- has eroded form 60% to 32% over the past year.
Apple promised that new products would be coming later this year, and reports point to a media event to unveil the next iPhone next month. If the iPhone 5 wasn't enough to eat into Android's dominant market share last year, there probably isn't a good reason to get excited about the prospects of the industry-defining smartphone's next entry.
Apple doesn't need to look hard to find tech companies that falsely assumed they would be on top forever following what worked in the past. There are too many companies that naively figured that they would always be worth a market premium, and Apple probably doesn't even realize the damage that it's doing to its reputation by continuing to market older iPhones and iPads to achieve lower price points.
Apple needs to not only innovate, but it needs to innovate faster.
Why can't Apple be more like Taco Bell? The chain took a year between the first and second Doritos Locos Tacos introductions, but it wasn't afraid to hit the market a few months later with the third incarnation. How cool would it be if Apple offered iPhone and iPad updates every few months?
The argument here is that the debuts wouldn't be the events that they are now -- or that the enhancements would be minor -- but let's pull up a stock chart. As well as Apple has fared in recent weeks, the stock is still trading nearly 30% below its peak from September of last year. That all-time high, by the way, happened the morning the iPhone 5 hit the market.
If Apple could pick up the pace of introductions, it would give it more time to respond to Android enhancements and market conditions. One can argue that the headier pace of rollouts will also encourage Apple to raise the bar at a quicker pace. If it wasn't for Apple's pace of annual refreshes, we would have probably had the cheaper iPhone that we may get next month and the larger iPhone that we probably won't get next month by now.
Apple needs more flavor, and the market's getting hungry.
Apple is getting crunchy
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The article Why Can't Apple Be More Like Taco Bell? originally appeared on Fool.com.Longtime Fool contributor Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Apple and Chipotle Mexican Grill. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.