Will Apple’s next major product be a Gaming Console, Ipad 2 could give us some clues.

Erik Ackerlund – Imagine that the next great gaming console will not be a PS4 or a new Xbox 3 or a Wii 2, but a dedicated Apple Gaming console. Imagine how great a Apple game system could be; knowing the detail and effort they put into their products.

Why on earth would Apple build a gaming system? Well the financial numbers seem to point in that direction.I think the numbers may be obvious that this is the direction that Apple will be heading in. Their iTunes business is a force to be reckoned with, at the Ipad2 unveiling; Steve Jobs’ indicated they now have a iTunes user base of 200 million credit cards. That is an amazing number that is almost unfathomable. These users obviously far exceed what Microsoft claims for Xbox Live at 20 million. Apple has shared this iTunes one click purchasing login with their iBooks and App store. It would be easy for Apple to add one more store, the games store.

According to Mobile Metrics Flurry documentation it is estimated that in 2010, Apple apps on had taken a 19% share of the portable games market, this taking away increasingly from Nintendo’s dominate position with the ever popular DS line. This percentage is on an increasing trend that Apple is becoming a larger player. The Ipad2 will only further sustain that trend.

Music sales, one of the leading profit makers for Apple is on the down trend. Video game sales surpassed music sales for the first time in 2010. “Global Entertainment and Media Outlook” data suggests that in 2011 the gaming market will be worth $50 billion, sustaining an almost 6% growth in a time of recession. This is an attractive market that Apple can’t afford to stay out of.
With the latest release products from Apple all supporting faster graphics processing, including the Ipad 2’s new 9x graphics capability, it is shows they are serious about supporting the advanced needs of gaming. Apple has already attracted major game developers such as Electronic Arts and Epic and many others porting great games onto these systems.

With the development of the AppleTV to connect to your television and network, as well as their ability to build excellent portable devices with industry leading battery life, they have the technological ability to build a gaming console literally from off the shelf technology they already possess.

I expect the Ipad2 to help increase the gaming market in the portable arena, but only to a certain point. It will be interesting to compare Ipad2 sales to Nintendo 3DS sales during 2011. Ipad 2 with it’s multiple function capability with Nintendo’s dedicated 3d gaming that is usually picked by a younger market. And of course the price point difference.
Despite the lack of the 3D technology, the nine-times better graphics in the A5 chip along with the dual core processor will be great for games. They also added the HDMI port for connecting to your television and better sound. It’s obvious that Apple is responding to gaming on the Ipad 2.

Yet the Ipad 2 is not a perfect substitute for a dedicated gaming platform. Despite having a touch interface, the gyro sensor and cameras, the iPad and iPhone and iTouch still lack functional buttons with tactile feedback that so many games require.

Apple’s competitors are also looking at getting into the gaming market in a bigger way. The Wall Street Journal reports that HTC spent $40 million to acquire the technology for streaming games from OnLive. This end run around processing games locally picks up your controller movements and sends them to the cloud where they are processed on dedicated servers with the graphics streamed back to the user. This is an interesting move by HTC, but streaming even simple video is not always functional without some waiting, due to the overburdened networks. Also the lag times involved can interfere and simply cannot compete with locally processed graphics. With the HTC model, the only place it will work really well is probably when connected to a wifi network, which then means you may just as easily be close to a dedicated gaming console. Apple is putting the power to process games locally which simply give the user a superior gaming experience that we have all come to expect.

Apple has released what they call post-pc products the iPod, iPhone, AppleTV and recently the iPad. I predict that based on Apple’s increasing experience in gaming from apps on their existing platforms, their increasing ability to produce gaming graphics, the ability to produce hardware that interfaces with televisions, and the increasing market demand, that Apple will most likely produce a gaming console. They would not be the first of their kind to pull this off; Microsoft did it with the ever successful Xbox series.

What would an Apple gaming system look like? I would imagine it would be small and sleek probably similar to the AppleTV. The user interface would probably be made very similar but perhaps tweaked to be a little bit more entertainment oriented to appeal to a younger audience. It would obviously be able to have the functionality of the AppleTV, to stream video , have iTunes and the app store. Now it would have a dedicated gaming store. I doubt there would be any cd or dvd drive. All game purchases would be online as this would match the current Apple sales model. The system would need some sort of gaming pads, wireless of course. I would imagine they would pick up from the trend of Xbox Connect and Wii to have that ability of whole body motion input. Expect that iPhones and iPads could easily be used as controls for the device as well.

When does this all go down? I would expect a release in 1st quarter 2013 would make sense. Keep an eye of any acquisitions by Apple of any gaming companies, such as Electronic Arts or others. Apple needs a core gaming company to build the in-house titles to launch the system.