The next few months are key for Apple (NASDAQ: AAPL ) and the company's investors. It will set the course for the next few years with product announcements that can either get consumers and investors excited again or fall behind rivals who have been working feverishly to catch up. Here's why the next product announcement, whenever it is, is so important to Apple.
No longer the underdog
Apple has played the underdog card for three decades, not having to deal with the power position it's now in. When Apple announced the iPod, few people outside Apple faithful noticed. iTunes was ahead of its time and underappreciated until devices made it a key part of the Apple ecosystem. The iPhone was an unexpected revolution of smartphones in 2007 and when the company released the iPad in 2010, even Apple supporters were surprised the company could invent a new category of device.
For more than a decade Apple has wowed investors with a revolutionary device every few years. Now that it's been three years since the iPad and it's time for Apple to do more than make incremental changes to its products. If Apple is going to continue to lead the market it will have to do so with something big.
In smartphones Apple is no longer the market share leader -- Google (NASDAQ: GOOGL ) has now taken over, though the iPhone is still the best-selling smartphone in the world. That gap is closing as Samsung builds more and more desirable devices and Microsoft (NASDAQ: MSFT ) and BlackBerry improve their operating systems to compete. On the tablet side, Microsoft is integrating well with PCs and Amazon is going after Apple with a much lower cost product, something that puts pressure on Apple's margins.
Apple is no longer defining new categories in smartphones or tablets, and it's being hunted by some of the most powerful companies in tech. That's why investors are worried about falling profits and why the stock is trading for low multiples. But if Apple can wow consumers and investors with a new line of products, it could perk up the stock again.
The revolution of Apple TV
Apple isn't going to surprise anyone with a larger iPhone, cheaper iPhone, or a faster iPad, but Apple TV could wow customers. Before he died, Steve Jobs said they had cracked the TV, and when he cracks something, it's usually big.
The pieces are all there. Apple TV could be opened to app developers and iOS devices could control any number of games, media portals, or other creative apps. The integration with iPhones and iPads could be key, giving Apple a way to keep consumers in the ecosystem while leveraging existing devices.
It may also simply be time for Apple to make a move in TV. Google TV and Google Play add apps and functions Apple doesn't have to its devices. Microsoft will launch the next-generation Xbox later this year, and if Windows 8 is any indication, it will be integrated with more than just games. Microsoft has many of the capabilities Apple has and more with its console, and if Apple is going to stay ahead of the curve now is the time to do it. Rumors are that we'll see either a better Apple TV or an iTV by the holiday season, and I think the sooner the better.
The category-defining watch?
If rumors about an iWatch are true it will be fascinating to see details and consumer reaction. Watches aren't exactly hot commodities with younger generations, mostly because the time is readily available on cell phones, but Apple has been known to define new categories no one thought possible.
If Apple were able to combine a new and improved Apple TV with a stunning iWatch, it could be the boost investors need to buy the stock again.
Competitive landscape is changing
Microsoft, Samsung, Amazon, and Google are hot on Apple's heels, and the company won't be able to maintain high margins and unit growth without taking its product portfolio to the next level. That's why this next product launch is so important for Apple. The company only announces new products a couple of times a year, and if the next one is disappointing it will allow competitors to catch up and confirm investors' fears that growth and abnormally high margins may be coming to an end.
There's a debate raging as to whether Apple remains a buy. The Motley Fool's senior technology analyst and managing bureau chief, Eric Bleeker, is prepared to fill you in on both reasons to buy and reasons to sell Apple, and what opportunities are left for the company (and your portfolio) going forward. To get instant access to his latest thinking on Apple, simply click here now.