Steve Jobs once asked John Sculley, “Do you want to sell sugar water for the rest of your life or come with me and change the world?” That question pushed Sculley to leave Pepsi for Apple, and it has lingered ever since as a reminder of the difference between comfortable success and transformative ambition.

The launch of the iPhone 17 makes the metaphor newly relevant. On paper, Apple delivered a strong upgrade: a Promotion display for the base model, a new camera-compute module in the iPhone Air, better cooling systems, larger batteries, and advanced sensors. Yet Ben Thompson captures the paradox neatly:

“Apple, to be fair, isn’t selling the same sugar water year after year in a zero-sum war with other sugar water companies. Their sugar water is getting better, and I think this year’s seasonal concoction is particularly tasty.”

The products are objectively stronger, but the reaction has been muted. For many, the updates feel like just another incremental step.

Sustaining Innovation vs. Disruptive Change

In innovation theory, sustaining innovation improves existing products while disruptive innovation creates new markets. Apple, at least with the iPhone, is firmly in the sustaining camp. Year after year, it makes the best smartphone slightly better.

There is nothing wrong with this. The iPhone remains one of the most profitable products in history. But perception matters. Apple once held the cultural position of reshaping industries, not just refining them. The company introduced touchscreens that replaced keyboards, the App Store that launched ecosystems, and sensors that powered whole new categories of apps.

Today, that mantle of frontier-shaping innovation seems to belong elsewhere.

Apple and the AI Gap

The current wave of excitement in technology is centered on artificial intelligence. OpenAI is defining consumer experiences with ChatGPT, Google is pushing AI into search, Microsoft is embedding copilots across productivity, and Anthropic is competing with rapid iteration. These companies are setting the tone for where the industry is headed.

Apple, by contrast, has been quieter. Its announcement of Apple Intelligence and its emphasis on on-device privacy are important, but they have not yet redefined the conversation. Thompson notes that this reflects long-standing choices: by not investing in large-scale cloud services or search, Apple protected its privacy reputation but limited its data leverage for AI.

This does not mean Apple is absent from the race. Its pattern has often been to enter late but redefine categories with a user-friendly design and integration. Still, perception matters. If Apple is seen as lagging in AI, it risks ceding cultural and strategic ground, even as it continues to sell record numbers of iPhones.

The Sugar Water Trap

This is the danger Thompson highlights: Apple risks becoming a luxury hardware company that iterates on refinement rather than taking the next leap. The iPhone 17 may be excellent, but it feels safe.

Profit incentives reinforce this pattern. By introducing the iPhone Air at $999, Apple created room to raise Pro prices and strengthen margins. Services revenue continues to climb, fueled by the installed base. The ecosystem lock-in is powerful. All of this makes Apple healthier financially than ever before.

But success creates inertia. When quarterly growth and customer loyalty are guaranteed, the urgency to disrupt yourself diminishes. That is the essence of the sugar water trap: being satisfied with selling something very good, while losing the role of reshaping the future.

For Product Managers

There are clear takeaways for anyone building products:

  • Mind the perception gap. Internally, incremental improvements may feel monumental. Externally, they can look minor. Storytelling is part of the product.

  • Balance bets. Mature products need sustaining innovation, but companies must also invest in future disruptions. This balance is hard, but essential.

  • Beware of comfort. Success can make teams focus on optimization rather than reinvention. Leaders must actively fight complacency.

  • Think beyond revenue. True innovation is not just about quarterly results. It is about planting seeds that could define the next decade.

The Bigger Picture

Apple is not selling sugar water — its products remain unmatched in quality. But the reaction to the iPhone 17, combined with the company’s cautious posture on AI, shows how perception shifts when a company leans too heavily on sustaining innovation. For Apple, the risk is losing its cultural position as the company that makes the future arrive early.

For product leaders everywhere, the lesson is sharper: incremental progress is not enough. To avoid the sugar water trap, we must balance the discipline of refinement with the boldness of reinvention.