Malibu Stacy's new hat
There's always plenty of ink spilled when Apple (NASDAQ:AAPL) has one of its product release bashes. The latest offerings were a bit unsatisfying to my Foolish Macophile colleagues. The biggest Apple fan in our office had a bit of a hangdog expression on his face as the announcements rolled out, blogged live by dedicated geeks, and basically revealed little more than upgrades to existing devices.

The most amazing whiff was the unrequited report of Apple's iPhone. Personally, I wasn't surprised by the no-show. Remember, the analysts and fanboi press out there were claiming that Cupertino would be able to shove an entire converged mobile device (phone plus PDA plus iPod) all into a unit as small as an iPod nano. Simply taking a look at the size of devices from competitors like Motorola (NYSE:MOT) or Nokia (NYSE:NOK) would have convinced anyone with a functioning frontal lobe that there's currently no way to squash all of that into a Nano skin. Or, to put it more simply, if the Nano could be so much smaller, it would be.

That said, Apple did throw down the gauntlet with iTV, a device that will plug into your tube, then wirelessly stream media from your home Mac or PC. A lot of techies have been working a long time to try to make this work well, and even Apple doesn't have it right yet, since it's not appearing until the beginning of 2007. Here's who's got the biggest potential to lose when iTV hits the street.

The victims
The small fry who already make devices that do the same thing -- and there are some -- stand to lose in a big way. You can bet Apple's version will be slick, clean, and resonate well with the iFaithful. For a company like Pegasus Wireless (NASDAQ:PGWC), which has been hyping its wireless video-transmission devices, this may be the final blow to a still-overinflated stock. And if the reported compatibility with PCs is true (hey Apple, do us all a favor and make it run Windows Media files, will ya?), even nonMacs like me will be tempted to pick one up.

Hewlett-Packard (NYSE:HPQ) stands to lose big in a couple of ways. The first is with "media PCs." Simply put, no one has made these workable yet. Let's face it: PCs that crunch media files well are generally large and noisy, and we don't want them in our living rooms, even if they're running an operating system, like Microsoft's (NASDAQ:MSFT) Windows Media Center Edition, that makes the screen legible from 10 feet away.

I give Apple credit for realizing that trying to jam a PC into our home theaters is probably a lost battle -- at least for now -- and taking the simpler route to link the office box to the family-room entertainment center.

But HP also stands to lose on an interesting product few know anything about: It's been hawking a Wi-Fi-capable, media-crunching, 37-inch LCD "Mediasmart" TV for quite a while. The trouble for HP here is twofold. First, no one's heard of this thing. (I only came across it in Mark Cuban's weblog.) The next is that it costs more than the price of iTV plus a 37-inch widescreen. And, of course, folks who already have the big old widescreen won't need to buy a whole new unit. Thanks to Apple, we'll be able to just buy the gadget that interacts with the screen.

I think chip makers also stand to lose, especially if they blow too much cash trumpeting their home-media ecosystems. A project like AMD's (NYSE:AMD) Live! -- which looks more and more like a marketing gimmick masquerading as a home-media platform -- will probably fall by the wayside as well, for the same reason that media PCs are going nowhere fast. People don't seem to want a computer in the living room. They want to press a button, sit back, and enjoy.

The survivor
Oddly enough, I think dinosaur Microsoft has the biggest chance to head Apple off at the pass. But not via its goofy PC-to-TV OS upgrades. I don't think Vista-home-media-whatever will do anything to slow the acceptance of the iTV device.

But the Xbox 360 could. It's capable of streaming media directly from a PC, with one big hitch. The video is only supposed to work with the Media Center OS. This was a ridiculous mistake, in my opinion, because so few Media Center OSes exist out there. It not only should have supported streaming from plain vanilla Windows XP, it should have run more file types.

Microsoft has a good chance to fix this with the release of Vista, and the reports are that an Xbox 360 will be able to stream from the regular Vista home editions. Microsoft should make sure it supports as many file types as possible: DivX, Mpegs, Quicktime, who cares. Stream them all and run them all. But it should also ensure that Xbox 360 streams media from PCs that haven't been upgraded to Vista.

And while you're at it, Mr. Softy, toss the HD-DVD drive into the Xbox. That way, at a price point not too far off from iTV, you'd be giving consumers a streaming station, along with a top-of-the-line console and next-generation DVD player.

That would be enough to convince me to forgo the iTV, and I'm sure others would go the same route.

How about it, Mr. Softy? Think you can get this one right? If you don't, Mr. Steve may just eat a little more of your lunch next year.

Microsoft is a Motley Fool Inside Value recommendation. The latest issue came off the presses Wednesday, and a free, 30-day look is just a click away.

At the time of publication, Seth Jayson was long Microsoft common stock and calls. View his stock holdings and Fool profile here. See what he's Digging these days. Fool rules are here.