Sep 13, 2012 · 7 minutes

As of yesterday, the iPhone is no longer thrilling. It's still a great device, for sure, and it will sell well. I'll probably buy one. But yesterday's launch didn’t generate the excitement that an iPhone would have two years ago, when it clearly led the pack, when its design wowed rather than merely satisfied, and when it changed the game with its retina display. After settling for incremental improvements for the iPhone 4S, people expected the iPhone 5 to be something amazing. What they got instead were more incremental improvements.

This time, that matters to Apple because the iPhone is no longer head and shoulders above its opposition. Instead, it is just one of many great smartphones on the market. It can make a strong argument that it's the best device, but fans of the Samsung Galaxy S III and even the Nokia Lumia can fairly counter that their phones are superior in their own ways.

Apple faces the same issue with the iPad. It has held the innovator’s advantage in tablet computing for two years, and until just a couple months ago it clearly had the best product on the market. But now the competition has caught up. People love Google’s Nexus 7, and the latest Kindle Fires, in just the second generation, are already looking kick-ass. The iPad, rather than being the default choice, is now merely another choice.

In October, the iPad Mini will come out, but it won’t be breaking any new ground. In fact, because Google got there first with the Nexus 7, it could be seen as Apple’s first defensive product move since before the iPod. The iPad Mini is also likely to be a mild marketing disappointment, mainly because it’s unlikely to be able to do anything different from, or better than, the iPad – except be smaller.

With two product launches in a row that show Apple is merely keeping pace with innovation rather than leading it, the world’s most valuable company will start to seem mortal.

But its problems run deeper than that. Since the iPod, Apple has been making exquisite products that have captured people’s imaginations and made computing simpler. But the hardware is only one part of Apple’s success. More important is that Apple closed the loop on the ecosystem of digital media consumption, from the device to the software to the marketplace. The App Store and iTunes have been central to that closed loop, locking users into a comfortable closed garden with beautiful lawns and an abundant play area. By tying our credit cards to our music and movie consumption, and then wrapping it all up into highly desirable packages such as the iPhone and the iPad, Apple has made us its willing (and happy) bitches.

Now, however, the grass on the other side of the garden’s fence is starting to look decidedly lush, just as Apple’s ecosystem is starting to come apart at the seams. Now that Ping is dead, media consumption via iTunes is completely non-social at a time when social is becoming only more important to the distribution of content, as well as the discussion around it.

iTunes doesn’t let users stream music or movies, which means we're required to own and store content either in our hard drives or in personal parts of the cloud. And we still have to pay for that content on a piece-by-piece basis. What’s more, because iTunes is a closed garden, it can’t benefit from third-party developers who can innovate and improve on the platform. Spotify, MOG, and Rdio outplay and outsmart iTunes on all those fronts, which is why I agree with Adam Penenberg that iTunes is doomed. And once iTunes falls? Well, there goes one of the central planks to Apple’s current dominance.

Meanwhile, Google’s Play store is starting to look pretty good. Because it’s tied to Google Wallet, it already has the credit card lockdown sorted, and its app store is competitive with the iOS App Store. As the Samsung Galaxy S III has proven, Android devices are outselling iPhones, which means Google Play is only going to get more relevant and useful. And remember, we're only in the dawn of the digital world. At the same time, Amazon has built a formidable digital content marketplace of its own, with streaming music and movies, the largest digital bookstore on the planet, and, to tie it all together, a device that is close to but cheaper than the iPad.

Amazon, in fact, is the greatest threat to Apple’s dominance, because it has been gradually building its own ecosystem for years, with an even longer-term view and a wider marketplace than the company from Cupertino. The importance of that ecosystem was brought into focus with last week’s announcement of the seriously impressive new Kindle Fire tablets. Amazon’s tablets are not only affordable for a mass market, but they will increasingly come to serve as a handheld storefront for pretty much any consumer good imaginable. Apple has done great by selling digital content. Amazon will have all that, as well as physical products (assuming it’ll be a few years yet before you can print them out at home).

Want to watch a movie in bed? Stream it on the Kindle Fire. Need some toothpaste? Order it from the Kindle Fire with the tap of a button. Gotta get a tent for the weekend’s camping trip? Turn to the Kindle Fire to get it delivered. Meanwhile, Amazon will pocket a little bit of change on every transaction. As Jeff Bezos said last week, “We want to make money when people use our devices, not when they buy our devices.”

It’s possible that in 20 years we’ll look back on the start of this century as a fleeting moment in the history of the Internet in which Steve Jobs was able to build an incredible company that enjoyed a decade of dominance, from the iPod through to the iPad. Under Jobs’ leadership, this future narrative might go, Apple innovated on a dazzling array of fronts – business model, marketing, design, devices – while simultaneously disrupting the music, movie, media, and telecommunications industries. Its closed-loop ecosystem, which took money from customers at every step of the process, was allowed to prevail as long as Apple’s competitors were scrambling to catch up. During that time, it was able to enjoy high margins on its devices while also making a killing on accessories and content. But when Google and Amazon finally matched the groundbreaking iDevices, and when  startups out-innovated iTunes while Apple struggled to reinvigorate the legacy of its aging operating system, the gold on Cupertino's crown finally started to flake away.

Yep, that narrative is possible. But there might just be one more thing.

Apple’s strength has come from not staying with the crowd and instead revolutionizing technologies and products that we thought were already at their final point of evolution. And there is one last device that pervades almost every living room in the developed world that Apple could potentially do better than anyone else. That, of course, is the TV.

Apple can, and will, build a TV that is free of cumbersome external boxes, that is truly integrated with the Internet, and that has voice controls. It may also have a touch-screen. I’ve watched with amusement as my friend’s three-year-old son, already indoctrinated by the iPad, has tried to “swipe” the family TV on. To a three-year-old, that already makes total sense. Soon, it will make perfect sense to the rest of us.

During interviews for his biography, Steve Jobs told Walter Isaacson that he had “finally cracked” plans for an easy-to-use integrated TV set. It will do away with complex remote controls, and sync with all your devices and iCloud, Jobs told Isaacson. “It will have the simplest user interface you could imagine.”

In an interview with British newspaper The Telegraph in May, design chief Jony Ive said that if he was to be remembered for just one of his Apple designs, it would be the one he’s currently working on. “[W]hat we’re working on now feels like the most important and the best work we’ve done,” Ive said. But of course, he wouldn’t say what it is.

Who’s willing to bet it’s not a TV? And who’s willing to bet that Apple can’t do to the TV set industry what it did to the mobile phone industry?

My guess is that the Apple TV – the true Apple TV – is coming sooner rather than later, perhaps even in the first half of 2013. The iPhone 5 and the iPad Mini are great, but they will only get Apple so far.

The excitement over Apple’s products is waning, and iOS is getting tired. It’s time for Apple to remind the world that it’s not so mortal after all.