While I agree with you that innovation can certainly come from improving on poorly made products in a category, the problem is that Apple has significantly raised the bar for technological innovation. 25 years ago, Apple was the only one doing what they were doing the way they were doing it, so it was easy to stand out. Nowadays there are tons of tech companies following the "Apple Model" that offer compelling, innovative products in sleek packaging that work well. If apple doesn't invent new (or at least capitalize on emerging) categories, they will slowly fade into obsolescence. The two things they still have going for them are 1) Their products work REALLY well together and provide a seamless user experience, and 2) people are deeply invested in the Apple ecosystem of products. This is significant and gives them the ability to coast longer than most, but without true innovation, it won't last forever.
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EDIT:
I just read this post on another thread.
Now if Apple reframes the use of it to where the scope and function is much larger than simply a way to visually control your smart home, that could really be something.