On nearly every front, 2012 has seen huge success for Apple. The company’s No. 1 selling tablet now has a hot-selling little brother in the iPad mini, and Apple is only now catching up to very high iPhone 5 demand. Plus, Apple has the best-selling laptop in the United States with the $1,199 MacBook Pro. On the other hand, Android had a big 2012, too, with Google’s OS gobbling up 75 percent of the market share for all smartphones shipped. Plus, Apple’s tablet share has dropped 10 percentage points in a year thanks to low-cost slates like the Kindle Fire and Nexus 7.

 

Apple has also had its share of self-inflicted wounds, such as a half-baked Maps app that led to the ouster of senior VP Scott Forstall. And while Apple is still worth $135 billion more than Exxon, the company’s stock has fallen nearly 20 percent from an all-time high of $705 in September, to below $580. Part of that decline is due to a perception that Apple is merely iterating instead of truly innovating. Here’s what Apple needs to do in 2013 to be more innovative, more profitable and (yes) cooler.

 

1. A Fresh Face for iOS 7

Android OS on tabletWith more than 400 million iOS devices sold, it's clear that consumers really like the simplicity of Apple's mobile operating system. The fact that the core UI experience hasn't changed much since the original iPhone back in 2007 has made it easy for people to pick up an iPhone, iPod touch or iPad and know exactly what to do. However, as Microsoft demonstrated with its Live Tiles for Windows Phone 8, smartphones can strike a balance with a UI that's both intuitive and dynamic.

 

Sure, adding a Notification Center helped, and Siri has certainly spiced things up, but the overall look and feel of iOS remains static and boring. RIM's upcoming BlackBerry 10 Flow interface is more engaging, because it treats each open app as a mini widget and makes it simple to check your unified inbox at any time. Changes may alienate some long-time Apple customers, but with legendary designer Jonny Ive now leading the charge for “Human Interface," I expect bold, but calculated risks, such as icons that can be enlarged to become widgets.

 

2. Transform TV, Twice

Apple TVDepending on which reports you read (and believe), a new Apple TV product is either imminent or not launching until the end of next year. Actually, both timetables might be right. In the short term, Apple could be readying a new set-top box that would integrate with your cable service, banishing cable's ugly and confusing program guide in favor of a cleaner, sleeker UI. I also expect Apple to add Siri into the mix. Think, “Please record the Giants game,” or “Play Game of Thrones.” Motion controls are also a strong possibility.

 

But in the long term, Apple may debut a physical TV. Piper Jaffray analyst Gene Munster predicts a set in 2013 holiday season that costs between $1,500 and $2,200, with sizes ranging from 42 inches (great for the bedroom) to 55 inches. I'm not convinced that Apple is ready to enter the big-screen TV market, but it's clear that the company needs to focus on evolving the living room experience next year. With a rumored Xbox TV set-top box on the way that will combine entertainment and casual Kinect games, the next Apple TV(s) will face competition from both new players and established veterans, like Samsung.

 

3. Make Bigger Phones

iPhone 3GS and iPhone 4I can't tell you how many people have told me they've opted for an Android phone like the Galaxy S III primarily because they wanted a bigger screen. I personally love how light and thin the iPhone 5 is, but shoppers have voted with their wallets, and they want displays larger than 4 inches. It's about choice.

 

As HTC proved with its Droid DNA phone, you can make a 5-inch device with a full 1080p screen, while retaining a design users can operate comfortably with one hand. Meanwhile, Samsung has already moved 5 million 5.5-inch Galaxy Note II phablets. Apple needs to enter this marketplace without creating fragmentation within its own ecosystem. The company must settle on an HD resolution that's easy for developers to scale and that can work just as well on a smaller handset as a larger one.

 

4. Open Up iCloud

cloud computing conceptThis might sound blasphemous for a company with a laser-like focus on integrating hardware and software, but it's time that Apple opened up iCloud. I can get Google Drive and SkyDrive on an iPhone, so why can't I get iCloud on Windows or Android devices?

 

On my Mac, I use OpenOffice instead of Pages for working with files. And I use Dropbox instead of iCloud for saving them so I can more easily access them on my Windows 7 work PC. Dropbox also lets you automatically upload photos to the cloud and access them on any device. With iCloud, your pics pretty much stay trapped on your Apple device. The whole point of the cloud is to make your files accessible anywhere, on any device. In 2013, the “i” in iCloud should stand for the individual and not Apple's iDevices.

 

5. Bring Back the MacBook for $750

Older white MacBookThe No. 1 complaint I hear from people deciding between a Windows machine and a MacBook is price: "Macs just cost too much." While it's true that Apple makes the bulk of its profit on high-margin hardware (witness the $329 iPad mini), the company has a real opportunity to steal customers away from Microsoft after Windows 8's unfamiliar interface has left so many customers baffled.

 

Apple can go for the jugular with a cheaper MacBook, one that still costs a good $200 more than the average notebook, but that delivers Apple's hallmark high-quality design. Heck, if Windows laptop makers can offer designs with touch screens for $799, Apple can offer a 13-inch, plastic, unibody MacBook (perhaps in multiple colors) with a 128GB SSD in the same price range. It would make a killer back-to-school deal.

 

6. Think Wearable and Fitness

Google Project Glass HMDGoogle’s Project Glass shows a lot of potential in its use of augmented reality. And a recently approved Microsoft’s patent application demonstrates that the company intends to compete in the head-mounted display space. Apple has reportedly been working on similar wearable concepts and prototypes, so it’s only a matter of time before the company shows its hand. What would an Apple i (my made-up name) do any differently than Google Glass? It would certainly sync with iCloud and all of your music and Siri would always be a just a press-and-hold with your eyes away. (Lets say eye closed shut for a second or two.)

 

But an Apple i is more down the road. In the meantime, Apple should dive into the hot fitness gadget market with an iFit to compete against devices like the Fitbit and Jawbone Up. Apple has contributed little to this space thus far, doing things like providing Nike Plus functionality inside the iPod nano. Now it's time to stop watching from the sidelines and take bolder action. As devices like the MotoActv prove, you can create a smart watch that combines GPS fitness tracking with a music player. Apple can do better than this by tapping into the power of the iOS developer community and its own design team.

 

7. Bring an Edge to Your Marketing

iPod Nano on wristThe Apple commercials that really stood out for me in 2012 came off as either defensive or too cute for their own good. Take the iPhone 5 ad in which Apple showcased its 4-inch screen by having a thumb touch all the corners. Subtext: “See, you don't need a big-screen phone.” Then there's the iPad mini ad that has a finger playing “Chopsticks” on the full-size tablet before moving onto the smaller one. It's a clever way of showcasing that the iPad's little brother can do everything the big one can, but it also feels too safe.

 

Samsung's ads, in particular, have more of an edge, such as the one in which a mom and dad queuing up for an iPhone 5 ask if this is “the line for apps.” Yes, this came off as defensive too, but even Apple fans had to laugh. In my favorite Samsung commercial, for the Galaxy S III, a wife shares a naughty video with her hubby just before he heads off on a business trip. It demonstrates a unique feature with a risqué vibe. Apple has a reputation as a cleaner, more family-oriented company, but it wouldn't hurt to inject a little more attitude and swagger into its marketing. Perception becomes reality after all.

 

 

(All photos taken from Wikimedia Commons except #6, credited to zugaldia/Flickr)

 

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This story was originally written for LAPTOP and is reprinted with permission here. Copyright 2012 LAPTOP, a TechMediaNetwork company.