Apple is misplaying the hand Steve Jobs left them, making themselves vulnerable to competition for the first time since iPod.

The company has always been at least one step ahead of the competition in hardware advancements and software experience.

It used to be that to switch to Android or Windows, you’d have to give up functionality, user experience and access to the latest and greatest apps. The switching cost to move to a competitor was very high.

Apple used this position to gain the upper-hand in partnerships — deal terms were often in their favor. It also gave them leverage on the consumer side.

We were more willing to tolerate buying new adapters for their Apple devices because the upside was worth it. This year, they doubled down on the “f*ck you” playbook instead of making major leaps in technology to bolster the position that allowed them to use the playbook in the first place.

Now, they’re making power moves from a weak position

In 2016, Android phones have surpassed iPhone with higher-resolution displays, better cameras, cloud features, waterproofing and early VR/AR — reducing the switching cost to Android.

Now, Apple is playing catch-up with competition. Yet, they’re still making FU playbook moves, like removing the headphone jack, further reducing the overall switching cost and chipping away at the faith of enthusiasts.

People are clinging onto their old Apple devices in fear of “what will they do next?” instead of writing blank checks excited for “what will they do next?!”

Android is also dominating global market share. The global market itself is reaching a saturation point, which means the biggest growth opportunities can be found in new platforms — an area in which Apple is behind and the competition is already moving on aggressively.

Wandering through their own tunnels without Steve’s light…

Apple has always been the leader in new technology platforms, from iPod to iPhone to iPad, but are nowhere to be found in AR, VR or self-driving vehicles beyond rumors (car, glasses). While Apple is rarely first, they have been the best and held their ground. Ask yourself now, if Apple does enter the VR/AR market, do you think they will be the best? My guess is your faith has eroded.

Apple Watch, the first product launch without Steve, was also the first not to move the needle. Since then, Apple events have become less exciting and more incremental, filled with unprecedentedly long and boring software demonstrations and underwhelming technology like TouchBar, HomeKit and HealthKit. Apple TV isn’t even 4K yet, while Roku is. Siri, which was first-to-market, has fallen behind Google Home and Amazon Alexa.

Meanwhile, Microsoft is innovating rapidly under the leadership of Satya Nadella and taking more risks in spaces that Apple is not — for example, HoloLens — and becoming seriously competitive in the desktop space with Surface Studio. I predict Microsoft will make a bold move in the mobile phone space to follow suit.

… scrambling to find a foothold

Apple recently downsized or dismantled their self-driving car unit and went through a company re-org. There has also been speculation that Jony Ive is checked out and there’s going to be a big shake-up at the company. These are clear signs of leadership and organizational issues.

Some argue that Apple is shifting to being a software company. This bodes even worse, because their software has been declining in usability and stability. The new iMessage and latest version of iOS demonstrate a naiveté about how people actually use software they love. iCloud is notoriously bad. Furthermore, Apple has the wrong culture for software development. Teams aren’t allowed to talk to each other and they don’t learn from data, thus they can’t learn nearly as fast as a real software company.

To make a comeback, Apple needs a visionary CEO

To make a comeback, Apple needs a visionary CEO. Tim Cook is an operator CEO and is doing a great job increasing profit margins and company efficiency, but has yet to show any prescience or urgency to be a leader in innovation.

In contrast, Satya Nadella is the visionary CEO that is bringing Microsoft back to relevance while Steve Ballmer was the Tim Cook of Microsoft (Steve Blank also wrote about this).

The App Store is Apple’s final stronghold

The App Store was the greatest thing to happen to Apple and it’s keeping iOS alive today. Apple’s most important demographic are the affluent and the enthusiasts. Even though iOS market share in the U.S. has dropped by 16 percent since 2012, the App Store still grosses 4X more than the Play Store.

The theory is that iPhone owners are willing to pay more for their devices, and have more disposable income to spend on apps than the lower-income demographic of Android users. Historically, Android phones have been more affordable, but lacked in technology and apps. But now that they are competitive with, if not better than, Apple devices, we will start to see more of Apple’s key customer-base switch over to Android devices and (gasp) even Microsoft computers.

If enthusiasts and the affluent begin switching over due to the decline in innovation, the Play Store ecosystem could gradually become more appealing to developers

Developers like to be close to the latest trends in technology and also the most lucrative ones. If Apple falls behind on new platforms and developers begin to enter the Microsoft and Android ecosystems, it could be an opportunity for competitors to shepherd developers away from iOS and into their own mobile and desktop platforms. When the developers begin switching over, Apple is in serious trouble.

I’m hopeful, but not optimistic

I’m hopeful that Apple swings for the fences and makes some big moves on new platforms. I hope they can continue their excellence in design thinking and product leadership, but given what I’ve seen since Steve passed away, I have major doubts.

Apple is not going away anytime soon, but they’re facing the fiercest competition they’ve had in a long time. The ball of inspiration and awe is on the verge of being passed to the competition, and it’s time for a new quarterback.

Apple’s latest release, “Designed by Apple in California,” is an amazing picture book that chronicles the breathtaking visual story of Apple’s rise to its current plateau. Maybe they’ll release a special cover for this book available in 14 colors soon. Mine already has a smudge.