Apple's (NASDAQ:AAPL) expected iPhone 6 launch will most certainly be the biggest device launch of 2014, as the company releases the fourth major refresh to its iPhone family. While the iPhone's hardware, software, and size are all likely to change, consumers and investors still want more from the company.

Since Steve Jobs's passing, many have questioned Apple's ability to innovate and create great products in new markets. Unfortunately, the company has been slow to respond in key industries like wearables, and in one particular space where it is missing a golden opportunity.

The power of Apple
In Apple's last quarter it sold 35.2 million and 13.3 million iPhones and iPads, respectively. Importantly, these enormous numbers came ahead of expected product launches, a period where many thought consumers would wait a few months longer for the newest devices. However, Apple's success demonstrates the power of its brand, where it can release updated versions of existing products and create many billions in annual profit.

Still, in technology, what's in favor with consumers can change quickly. And although Apple has a strong ecosystem filled with consumers and businesses that are interconnected on various devices, we must still wonder when Apple will unleash its next big product.

Planning ahead with new products and services
For all the good things we can say about Apple's hardware, Google (NASDAQ:GOOG) (NASDAQ:GOOGL) is just as dominant on the Web and Microsoft (NASDAQ:MSFT) in software. Yet, neither Google nor Microsoft have grown comfortable in their successful time-tested niche markets, both looking ahead to the next 10 years with new products.

Specifically, Google has taken the broadband Internet market by storm with Fiber, a multi-billion dollar project that increases Internet speeds by up to 100 fold versus the average broadband provider. For Microsoft, it has embraced the cloud, specifically cloud infrastructure and application platforms to become a viable competitor against the juggernaut As a result, Microsoft and Google have their own insurance policy beyond their flagship industries to create growth in the decade ahead.

Apple should take notice
For Apple, it's already late to the wearables market, and even with the Beats acquisition, music isn't really a game-changer for a company with $180 billion in revenue. However, there is one market where it could thrive with its premium pricing and services strategy, a market that is growing especially fast, smart TVs.

Apple has been long-rumored as a company that could enter the TV space, but nothing official yet. Of course, the company has Apple TV, which connects users to movies and shows via iTunes along with photos, music, and Internet content. In total, Apple has sold 20 million of these devices, including seven million over the last year, creating more than $1 billion in revenue from media content in the 12-months prior to April of this year.

Therefore, Apple has the foundation for an entrance into the smart TV space, but desperately needs the corresponding hardware, with now being the time to strike.

According to BI Intelligence, 75 million smart TVs shipped globally in 2013, and 101 million are expected this year. Then, in 2015 smart TVs shipments are expected to surpass traditional TV shipments with 124 million, followed by 148 million and 172 million in the following two years, respectively. Therefore, from 2013-2017, smart TVs are a business that's growing at an annualized rate of 23% -- which is actually faster than the rate of e-commerce growth in the U.S -- and will eventually own nearly 75% of the total TV market.

As a result, with the smartphone and tablet markets both reaching maturity in the U.S. it seems logical that Apple would take such data in stride, and make an aggressive push into the smart TV space as its next big-time market.

Falling prices should not be a concern
Now, one reason that investors reject the idea of Apple creating a smart TV is because the price of TVs in general have collapsed in the last decade. Back in 2005, the average 32-inch LCD TV cost $1,566 , then $729 in 2007, and in 2012 fell to just $435. Today, most 32 inch TVs can be purchased for under $350, and while smart TVs command a slight premium, its prices have also seen rather aggressive declines in the last several years.

With that said, consumers and investors tend to forget that when cell phones were first introduced, they were expensive luxuries that only the wealthy could afford, and gradually saw price declines over time. In fact, Whiteboard Advisors estimates that the average price of a cell phone in 1984 was $4,000 after being adjusted for inflation. Still, Apple has managed to become the most valuable company in the world despite these lower prices, and has been able to demand higher prices due to the luxury of its product.

Foolish Thoughts
In other words, price decline worries are irrelevant as it applies to Apple not entering the smart TV space, and investors should realize that Apple is missing a golden opportunity by not acting on an industry that's expected to ship 124 million units next year. With all of Apple's devices being connected, there's no doubt that a smart TV would be a big hit with consumers, and could be meaningful for the company's fundamental performance.


Brian Nichols owns shares of Apple. The Motley Fool recommends, Apple, Google (A shares), and Google (C shares). The Motley Fool owns shares of, Apple, Google (A shares), Google (C shares), and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.