Not surprisingly, Microsoft and Nokia also came out to play Apple's iPhone Launch Valuation Drops: A Trend for Reasons You Don't Expect by Gavin Matthews 17

One of Microsoft’s chief motivations in its acquisition of Nokia is the existing user base opened up to the tech giant. Now, when Microsoft launches a new mobile operating system, it can start with subscribers, rather than generating them from day one.

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Regardless, Apple has rather clearly shifted its innovated-based trajectory into the long game Apple's iPhone Launch Valuation Drops: A Trend for Reasons You Don't Expect by Gavin Matthews 17

The long game sheds innovation and zero-day success (the “next big thing” approach) for broad adoption. When innovation can no longer propel a company to success, it must gain worldwide appeal to stay relevant and drive sales.

Update: The Atlantic takes the same approach, but to a different conclusion. This lack of innovation threatens Apple’s core existence.

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Initial reflections on the phone are useless measures: the experience of the Nokia Lumia and countless other radically inexpensive and colorfully hip phones dictate that the iPhone 5c will likely reach a market unseen in Apple’s history Apple's iPhone Launch Valuation Drops: A Trend for Reasons You Don't Expect by Gavin Matthews 17

The addition of Japanese and Chinese markets alone can dramatically swing Apple’s market share upward. Combined with the lower price ($99 for the base model) and color palette, it is engineered to be cheap and flashy, appealing across the world. The current iPhone user base appears to be missing the point: Apple, for half of its division, no longer cares about innovation and aesthetics. Adoption is the new key.

The Lumia, Nokia’s flagship, is a great comparison. The phone’s bizarre endless screen, coupled with a bright range of colors, made it trendy. It sounds juvenile, but the Lumia nearly singlehandedly saved Nokia, selling a remarkable 13 million phones in the first two quarters of 2013 alone.

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For a company of any size, a 6% drop in valuation is scary and risky, but not at all unexpected: this is part of the plan Apple's iPhone Launch Valuation Drops: A Trend for Reasons You Don't Expect by Gavin Matthews 17

Apple does sit in an interesting position: with unheard of cash assets, a revenue rivaled only by petroleum companies, and a computing empire shadowing traditional market agents, the company can afford a 6% drop. Investors will remain, shareholders or not, allowing Apple a remarkable degree of freedom for a company of its size. It simply will continue to be healthy, so long as it advances.

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The Android operating system in particular, due to its fragmented and fundamentally open nature, became the dominant market force and supported more radically changes on a stable platform Apple's iPhone Launch Valuation Drops: A Trend for Reasons You Don't Expect by Gavin Matthews 17

Essentially, because Android was easy to access, as opposed to iOS, it created a stable platform from which developers could really experiment. As a result, Google’s Nexus models in particular began to rival the design cues and innovation standards of even Apple.

Android today holds nearly 80% of smartphone deliveries, a radical shift from even 2011.

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Like the Star Wars prequels, nothing can touch the classic Apple's iPhone Launch Valuation Drops: A Trend for Reasons You Don't Expect by Gavin Matthews 17

Jar-Jar Binks aside…

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Like computing’s Moore’s Law, which forms a correlation between time and transistor size, there reaches a point when innovation must be so exponentially large that no company, Apple’s behemoth included, can keep up Apple's iPhone Launch Valuation Drops: A Trend for Reasons You Don't Expect by Gavin Matthews 17

“The complexity for minimum component costs has increased at a rate of roughly a factor of two per year. Certainly over the short term this rate can be expected to continue, if not to increase. Over the longer term, the rate of increase is a bit more uncertain, although there is no reason to believe it will not remain nearly constant for at least 10 years. That means by 1975, the number of components per integrated circuit for minimum cost will be 65,000. I believe that such a large circuit can be built on a single wafer”

Eventually, transistors will be too small to practically exist, a critical point when the industry as-is will have to shift. When transistors enter the atomic size level, further reductions in size are, at least now, impossible. Likewise, Apple’s innovation has reached a critical mass, when the company can never again meet investor demands for more and more radical approaches.

This point in particular is damning for Apple. Risky innovation could deliver the desired change, but also risks being too radical. Apple then loses.

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IPhone 5S Apple's iPhone Launch Valuation Drops: A Trend for Reasons You Don't Expect by Gavin Matthews 17

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IPhone 5c Apple's iPhone Launch Valuation Drops: A Trend for Reasons You Don't Expect by Gavin Matthews 17

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Apple’s announcement, for example, fell not only just after a particularly juicy jobs report and indications of a Fed reduction in mortgage security buyouts, but also indications of a rapidly improving industrial and commercial market in China and a possible pathway to conflict resolution in war-torn Syria Apple's iPhone Launch Valuation Drops: A Trend for Reasons You Don't Expect by Gavin Matthews 17

Bloomberg covered these shifts well, each of which led to fairly significant market gains. It is entirely possible, while not guaranteed in any way, that these events overshadowed Apple’s announcement, deeply impacting market reaction that otherwise would have been focused on the company.

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