Nevermind the iPad, What’s Next for Apple?

image Now that the long-rumored Apple tablet has finally been unveiled as the iPad, we can turn our attention towards figuring out what Apple’s next big product launch might be. Based on the evolution of the company’s devices, software and recent business discussions the answer actually seems pretty clear: Apple should build a true web-enabled home entertainment television experience- the iTV. Here’s why:

Apple TV has been a failure.

For a company that loves to reference stats regarding the success of its products, Apple has been very reticent about the sales performance of Apple TV, repeatedly referring to the product as “still a hobby.” The device, which competes with over-the-top (video delivering over a broadband network and not through a cable box) offerings from the likes of Boxee and Roku, has not met with nearly the same success as other Apple products since its launch 2 ½ years ago- primarily because it functions as a peripheral device and not as an end-to-end Apple experience.

Apple’s corporate success has been built upon its desire to create elegant and simple user experiences around its products. The development of the iPad, iPhone/iTouch, iPod and Mac is entirely controlled by Apple from the moment a user turns them on to when the device is powered down. This allows the company to design products that tightly integrate the aesthetic design and functionality of the hardware with the software and services, making it intuitive and easy for consumers to use. All that users have to do is connect the device to a network (broadband or mobile- if even that) to get going. Apple TV on the other hand functions as a peripheral device within a broader television viewing experience that Apple does not have complete control over. This leaves consumers to deal with separate controls for Apple TV, the television set and potentially their cable set-top box, creating a very un-Apple-like experience from the integration of the hardware’s aesthetics, to the rendering of content on the display, to delivering additional value through applications.

iTunes has a robust video content offering.

What started out as a music catalog for the iPod has grown to include podcasts, audio books and, most importantly, video content from television networks and movie studios. While the iTunes store has successfully been selling access to televisions shows and movies on a per unit basis over the years, there are persistent rumors that Apple is in discussions with these same video content providers to offer a subscription-based service through iTunes, mimicking cable’s content offering, but at a lower price point. Since the iTunes software is integrated with Apple’s operating system already, connecting it to an iTV device becomes trivial.

The AppStore already competes with TV and gaming consoles.

One of the big trends at the Consumer Electronics Show earlier this year was web-enabled televisions that offer not only video streaming services over the internet but access to widgets through the likes of Yahoo’s Connected TV. With 140,000 apps on its platform, Apple has a massive head-start on potential competitive offerings from television manufacturers. With the iPad now expanding the opportunity for game developers while also providing a scaling solution for apps currently in the App Store, Apple has become an even greater threat to traditional gaming consoles from Nintendo, Sony and Microsoft. By also leveraging apps or hardware, iPhones and iTouches can be turned into remote controls, enabling these apps to work in a more traditional television viewing experience as well as allowing for multi-user games to be played on a single screen, a capability that has been an exclusive feature of gaming consoles to date.

The iPad is a personal entertainment experience.

While the iPad offers a great medium through which to consume a variety of content (apps, books, photos, magazines, movies, websites, etc.), because the display is only 9.7 inches it doesn’t make for a great experience when more than one person wants to participate. For an entire family to enjoy watching television or playing games together there needs to be a larger screen.

The iMac’s monitor is already big enough.

  Even though Steve Jobs referred to Apple as the largest mobile device company during the iPad’s launch event, the company still sells a fair amount of Macs. The current 27 inch display is large enough to already compete with smaller LCD and plasma television displays on the market today. The iMac also offers a great example of how Apple would approach designing-away the clutter associated with today’s television and gaming console cords and cables, creating a much more aesthetic and desirable device for display at home.

With a complete line of mobile devices now available to consumers as well as content and app catalogs that render across Apple’s entire portfolio of hardware products, Apple will need to find new growth opportunities beyond its current line of ‘iProducts’ in the future. With internet-enabled televisions expected to be a $29 billion worldwide business by the end of next year, and with an average of almost 3 television sets in the over 110 million households in the U.S. alone, Apple can make a multi-billion dollar business out of home entertainment-enabled televisions- especially when you take into account the recurring revenue opportunity provided by video subscription services.

Considering Steve Jobs’ almost maniacal, hands-on approach to launching products, it’s doubtful that we would see a version of the iTV before January 2012. Until then Apple fans can enjoy the launch of the iPad and the evolution of Apple’s content offering in (hopeful) anticipation of a better home entertainment experience.