in·no·vate verb \ˈi-nə-ˌvāt\
: to do something in a new way : to have new ideas about how something can be done
Making a better chip is not innovating, it's a technological improvement. You basically just said that having a bigger hard drive should be considered innovating.
Making the UI more intuitive is innovating, implementing new features is innovating.
Please help me if I'm not understanding this definition...
It seems like being the 1st to bring 64 bit to a tablet makes it a "new idea"??
Apparently you are the expert though, so I will await your further elucidation.