Incumbent vendors typically compete by continually adding performance (typically in the form of new features) eventually overshooting the requirements of their target market and providing an opportunity for upstart competitors to provide a lower-cost "good enough" solution
Charlie posits that Apple has found a loop hole in the Innovator's Dilemma by competing on Design rather than functionality alone.
Their products feel right. And to their customers, "good enough" design will never be compelling, regardless of how high Apple sets the bar.
Yes, Apple leverages design. But I believe Apple is placing a premium on something else, not Design. To my way of thinking the that factor is the Apple Customer Experience. The company has truly put the customer at the center of everything that they do, from product development -- yes using design to create compelling, cool, and fun products that make the customer feel good - to customer support -- how much fun is it to go to a "Genius Bar" and oh by the way, continuing to immerse customers in Apple lore, culture and products throughout the experience, to the overall experience of visiting an Apple Store - either brick and mortar or online.
Design only gets you part of the way there. Enterprises can create compelling hardware and software designs and can leverage design thinking to create novel solutions to big problems. But if you leverage design with the ultimate goal of creating an innovative customer experience, that's the holy grail for building sustainable, innovative enterprises. Because when you put your customers at the center of everything you do, even things like product innovation which pleases your market, comes easier.