Apple’s Search for Innovation

It reinvented how people purchase music with iTunes. It created a whole new product category—the smartphone—when it developed the iPhone. And now its leaders look to revolutionize the world again by reportedly developing…high-end headphones.

In news reports that Apple has yet to confirm, the company is reportedly increasing its efforts in the headphone market, a $10 billion product niche that analysts believe could double in five years. It will need to show off an ability to innovate, market, and produce high-quality headphones to succeed in a market already saturated with products (including those made by a company Apple owns, Beats by Dre).

Apple, of course, became one of the world’s largest companies on the back of game-changing innovations in computers and phones. Headphones aren’t on the level of smartphones, but game-changing innovation in mobile industries is proving harder to come by. At the recent Mobile World Congress conference, dazzling innovations seem more incremental to many than in the past. Peter Cave-Gibbs, senior client partner for Global Technology Markets at Korn Ferry, says leaders are still wrestling with how best to deploy capital and talent and which areas to prioritize with respect to digital innovation.

For some, Apple’s headphone foray adds to the debate of its own challenges to keep pumping out great innovations. Experts, for example, say the company's recent moves, including adding facial-recognition features to iPhone X or introducing at-home speakers that compete with similar offerings from Amazon and Google, seem more short-term and incremental. “In the past, if Apple came out with a headphone it would be something like a chip you could insert in your ear,” says Jamen Graves, a senior partner in Korn Ferry’s Technology practice.

Still, even if Apple can’t create a revolution in headphones, analysts believe it at least has the ability to be profitable. “Apple has always been about understanding what the customer needs before they do and providing them with products and services that lead them to a more productive and easier life,” says Craig Rowley, a Korn Ferry senior partner who specializes in the retail industry. “Apple getting into headphones is just an extension of how it thinks of its customers. I’m sure whatever it will deliver will be market-leading and deliver at a service level that others haven’t thought about.”