Apple: A Product Plateau?

There are only so many world-changing products a company can create, but there's still plenty of room for Apple to extend established product lines

by Arik Hesseldahl

Where does Apple go from here? The question lies at the heart of the media and industry buzz that so often surrounds a company adept at surprising and confounding even the most jaded observers. It's particularly pressing in light of the oblique reference to a "new product transition" made by Apple (AAPL) Chief Financial Officer Peter Oppenheimer during a July conference call with analysts.

So I am left wondering, what might Apple have under its belt to surprise and delight customers over the next 6 to 24 months? Indulge me while I consider the prospect that at least for the foreseeable future, Apple has done virtually everything it could reasonably be expected to do, given consumer needs and the current state of tech and the economy. There are only so many world-changing moments that even Apple can create.

Apple has had quite a string of them in the past several years. The launch of the first iPod, for example, occurred seven years ago this month. The rest, as they say, is history. The iPod for Mac users begat the iPod for Microsoft (MSFT) Windows users, which begat the iTunes store, AppleTV, and the iPhone.

The Next Big Thing

Now the Web is rife with rumors that Apple will next introduce a device that bridges the gap between the iPod touch and the Mac—a machine that's one part mini-mobile PC and one part media and entertainment device. The idea seems obvious to anyone who's used the iPod touch for e-mail and Web-browsing but wants a larger screen. While other PC companies like Dell (DELL) and Asustek build mini-notebooks, Apple could best them all, or so the argument goes.

But then what? As obvious as the path to a tablet device seems now, I have trouble imagining the next obvious path that Apple might follow in 2009 and 2010. In fact, the company may very well be nearing a product plateau. And here's the real kicker: That may not be a bad thing.

Make no mistake. I see the potential for developments with established Apple product lines. Perhaps as soon as next year, the iPhone will evolve into a family of phones. Much like the iPod now comes in four flavors—touch, nano, classic, and shuffle—it's fair to expect that the iPhone will come in more than one model. The iPhone nano, for example, might appeal to those who think the current model is too big or too expensive.

Revving Up AppleTV

And something important has to happen to AppleTV, which still seems to be little more than the "hobby" Apple CEO Steve Jobs said it was last year. I see the potential for hardware and software enhancements, including TiVo (TIVO)-like DVR features, a DVD player slot, and so on. Apple could take the features of AppleTV and pack them into an actual TV set—but that's unlikely. Selling TVs is a cutthroat, low-margin business better left to the likes of Sony (SNE), Panasonic (MC), and Sharp.

But I see less potential for radical new lines of products. There simply aren't many to choose from. Sales of Macs are growing at rates that are the envy of the PC industry, the iPhone is now making its debut all over the world, and the iPod is closing on the sale of its 200 millionth unit. That's three very healthy business lines, and I'm not sure Apple necessarily needs another.

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