FORTUNE -- It's not hard to see the source of Wall Street's frustration with Apple (AAPL). It's that big red triangle in the chart at right that shows the rapidly growing share of the worldwide smartphone market owned by Google's (GOOG) Android.
What is Tim Cook waiting for? his critics ask. Why hasn't he lowered the price of the iPhone to compete with Samsung? Why isn't he making a cheaper model? Or one with a bigger screen? Or a new product -- any new product -- that will prove that the company hasn't lost its innovative edge?
"Perhaps Apple is mis-executing now, plain and simple," writes UBS's Steven Milunovich in the first of a series of thoughtful dispatches about Apple's long-term prospects. "But there may be method to Apple's apparent madness."
Milunovich says that he gained a new insight into Apple's methods recently by reading Youngme Moon's 2010 bestseller Different: Escaping the Competitive Herd. To catch up with him, I did too. It only took an afternoon, and it was worth it.
Moon is the chair of the MBA program at Harvard Business School, and her little book identifies three strategies that contemporary marketers use to differentiate their brands.
According to Moon, Apple has created one of the world's most valuable brands by mixing elements of all three strategies.
"Apple," she writes, "is the user-friendly brand that carries itself with breathtaking arrogance"
Apple would probably prefer to call it "confidence," says Milunovich. "But 'arrogance' is the right and not uncomplimentary term. Apple tells consumers how it's going to be. Don't like the move away from a 30-pin charger? Tough, product quality requires it. Like the ability to replace the battery? We don't want you futzing with our beautiful products. Don't want to subsidize and guarantee volumes on our phones, Mr. Carrier? Fine, you'll lose share."
According to Milunovich, Tim Cook has softened the arrogance factor that Steve Jobs personified, something the analyst fears might be a mixed blessing.
"His modesty probably is good in how Apple has responded to investors clamoring for return of capital, activists complaining about working conditions at Foxconn plants, and Chinese authorities questioning Apple warranties. We doubt Mr. Jobs would have been as smooth. On the other hand, Mr. Cook doesn't have the air of product genius, the reality distortion field so useful in negotiations, and charisma at product announcements."
That said, Cook may be right not to rush headlong into products in which Apple has little differentiation, writes Milunovich. "The brand promise of great consumer products at reasonable prices has a long-term value that shouldn't be undercut by chasing opportunities that undermine the promise."
"We all know that competitive advantage periods in tech are short," he concludes. "Apple's brand is one of its most powerful weapons in sustaining its advantage, and management is right to err on the side of protecting it."
Milunovich, who says Apple is currently in a "lull," rates the stock a Buy with a $500 price target.
Below: Moon discussing her book at Fortune's 2011 Growth Summit.
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