Indications are that Apple--long admired for setting the bar high when it comes to beautifully-designed, innovative, game-changing consumer products--may be facing some stiff competition. According to Forrester Research analyst James McQuivey: "Apple is under threat on the brand front in a way they haven't been in recent years."


A recent Brandweek article: "Amid Transition, Rivals Are Descending on Apple," questions whether the company's competitors are finally launching products that might take a bite out of Apple. Apple's response doesn't seem reassuring, either. New ads have gone away from its core message about product strengths to a defensive posture concerning competitors' products.
Okay. No more Apple puns...I promise.
The gist: Microsoft ads are spoofing Apple's Mac spots with tongue-in-cheek take-offs on the "Mac vs PC" campaigns. It seems the nerdy PC might be ready to turn the tables on the hip, contemporary Mac. Microsoft's new Windows 7, unlike the problem-ridden Vista operating system, is so Mac-like it's going to be tough–if not downright impossible–to poke fun at it.
Some point to Apple's response via its own ads as "a bit defensive," as a harbinger of this slowing momentum. "Industry watchers say there's a sense that the company's marketing momentum is stalling as it faces tougher new competition," according to Brandweek. Apple's current ads depicting our loveable PC nerd praising every version of Windows operating systems over the years obviously points to the deficiencies of past Windows incarnations and seems defensive to some industry analysts.
This may be an even bigger headache for Apple: quality perception among consumers is running neck and neck between Apple and Microsoft now, according to Brandindex. Amazingly, it is even suggested that "Microsoft is getting more bang for their (advertising) buck" than Apple is. Even as the Mac vs PC battles continue to rage, a new ad campaign has hit the airwaves for Verizon's new Droid cell phone, based on Google's Android operating system.
Ads cleverly lampooning iPhone's "There's an app for that," while running the features the Droid offers that are unavailable on the iPhone are getting a lot of attention. It's too early to tell how the Droid will impact iPhone sales. But it's about to get very interesting in the cell phone market.
Even with increased competitive threats on these fronts, Apple posted a huge fourth quarter that ended on September 26th, beating both its guidance and Wall Street analysts' over-inflated consensus. Sales increases in the fourth quarter of this year versus last year showed healthy increases. Macintosh computer unit sales increased by 17% and iPhone sales by 7%.
However, iPod sales fell 8% in the past quarter versus the same quarter one year ago. Of course part of this is due to "cannibalization from the iPhone, but still spells change," according to IDC senior analyst Danielle Levitas.
But you can bet Apple has already moved on; which is not to say the company doesn't continue to innovate the products it already has. In October, new iMacs With 21.5 and 27-inch displays were unveiled. The MacBook was updated with an LED-backlit display. In early November, it was announced that over 100,000 apps are now available on the App Store.
Still, daring new ideas fuel companies with innovative cultures like Apple. They never rest on their successes, and never stop pushing the envelope until they've created the next game changer. Currently, Apple fans are all abuzz about a rumored new tablet PC. It's being touted as the next potential product revolution from one of the world's hottest brands.
This raises some questions for me. And they're not about launching potentially expensive new consumer products in the midst of an economic downturn, either. Recession or not, consumers always seem to be able to pony up some cash for game changers.
Here are my questions, and I'd love to get feedback from HBR readers on these. Please feel free to jump in:

• Do you think Apple's innovation-driven culture may stall over time? That they just might run out of ideas?


• Do you think it matters whether Steve Jobs' team stays in place or not when it comes to innovation?


• Do you think it's just a matter of time before a smaller, hungrier company comes along and outmaneuvers Apple with game changing products?


• Do you think consumer product companies can be innovative without integrating designers directly into their organizations? If so, how?


• Do you think if a company like Apple continues to produce quality products but loses the edge on being first to market with game changers they can still be a viable company?


• If that happened, what would it do to consumer and financial industry perceptions about the Apple brand?