The fallacy most make when critiquing Apple’s service challenge is to believe that Apple needs to out-innovate competing services. The truth is, all they need to do is out-integrate them.
Integration is a huge part of Apple’s advantage, but its services still need to offer what users want. For instance, I was impressed with the OS X Maps demo where you can look up an address and send it to your iPhone. That type of integration will win people over. However, you still have people that use Dropbox because they feel it’s better than iCloud.