What we’ll see in 2013 from Apple

Even under the steadying influence of Tim Cook, 2012 was a year of big changes and historic challenges for Apple(s AAPL). Reports exposing the labor conditions in Chinese factories demanded Apple take a stand on a human rights issue and the Apple Maps debacle and repeated iCloud outages further highlighted its weakness in online services. It was also a year that saw record-breaking earnings, an all-time stock market high, and the company turbocharge its supply chain.

All of what happened in 2012 sets up next year to be even more important for the company, as Tim Cook and Co. must figure out how to continue dazzling customers with new have-to-have devices and investors with promising returns. Here’s some of what we’ll be watching for from Apple as the calendar flips to 2013.

iPhones for all my carrier friends!

iphone-fragment2013 won’t just be the year we see a T-Mobile iPhone. We’re likely to see a China Mobile iPhone and maybe even an NTT DoCoMo iPhone as well. Fragmentation in global LTE bands has already forced Apple to produce three different versions of the iPhone 5, breaking its long tradition of making a single device that works globally. As more European and Asian operators launch LTE in their own regional configurations and frequencies, Apple will have to start tweaking its devices further if it hopes to reach the same addressable market of its previous iPhone generations. So if Apple is optimizing iPhones specifically for Verizon(s vz)(s vod) and AT&Ts'(s t) bands, there’s no reason it can’t create a special TD-SCDMA device for the China Mobile, the world’s largest carrier by subscribers. For that matter there would be nothing standing in the way of capturing other global operators that have previously been left out of Apple’s smartphone party.  —  Kevin Fitchard

The patent wars wind down

apple-legalThis should be the year that Apple winds down the distracting legal battles it’s waged since early 2010. To protect the design of its mobile devices, Apple has stationed expensive lawyers in courts all over the world. But it’s not clear these tactics are having any significant effect. Instead, Apple’s been forced to divulge closely held proprietary information about its process and culture. And despite a jury awarding Apple a billion dollars from Samsung after ruling that it deliberately copied the iPhone and iPad, Apple’s biggest and most important hardware competitor continues to churn out popular and well-received devices. And there’s still a chance the award could be reduced. CEO Tim Cook has repeatedly signaled his distaste for these legal entanglements and under his watch Apple has begun to defuse the full-on “thermonuclear war” Steve Jobs began against Android(s GOOG). The company reached an important settlement with HTC this year, and Motorola could be next. 2013 could be the year that Apple and Samsung both decide that, while the stakes are high, this is a battle that should be fought in stores, not in courts. — Erica Ogg

Jony Ive’s new human interface in iOS 7

MountainLion_gamecenterOne of the most significant shifts at Apple in 2012 should result in a bigger one next year: the design of the software that powers your iPhone and iPad. Longtime head of iOS Software Scott Forstall was ousted from Apple, while his duties were distributed among other executives. Jony Ive, Apple’s industrial design guru, was bequeathed responsibility for iOS software design as part of his duties heading up the new Human Interface group. When iOS 7 is released sometime next fall, it’s a good bet we’ll see some changes in the design of the software. Ive has reportedly been lobbying against the gaudy skeuomorphic details that Forstall had championed — the linen textures, green felt, stitched leather trim, wooden bookcases, etc. — and with him in charge, we should start to see a cleaner, more modern look develop. And since the same person is now in charge of the hardware and the software design, iOS should more elegantly reflect the iPhone hardware’s capabilities. —Erica Ogg

A smart watch for the masses

04_Nano_WatchA number of watches that work with or use Apple products have hit the market, but none have actually been delivered by Apple itself. Instead, we’ve seen watch straps for the iPod nano and several third-party smart watches that work with iOS: the Pebble and MetaWatch Strata come to mind. While mainstream consumers aren’t exactly clamoring for such devices, these two generated more than $10.5 million in funding on Kickstarter, the bulk of that total coming from Pebble buyers. That’s no small dollar figure for what’s generally considered a niche device. Right now, Apple finally has everything it needs to create its own smart watch as a complement to its mobile devices and computers. The iOS platform is already more than capable enough for an intelligent Apple-designed wristwatch, and Apple has plenty of experience with touchscreens and communications hardware. A small iOS watch with Bluetooth 4.0, GPS and Wi-Fi could be created with support for companion apps such as exercise or health trackers as well as iTunes support for wireless music listening. I wouldn’t expect touch input to be supplemented with Siri for voice control on a smart watch as the device would need an always-on internet connection, but I’m not counting that possibility out either. In 2013, the time is right for Apple to enter, and possibly own, the smart watch industry. —Kevin Tofel

An evolving iTunes music experience

Globe of planet earth listening to music through headphonesApple has long been investigating alternative iTunes music listening model, and 2013 might be the year it makes a big move. Apple just recently integrated iTunes with iCloud and has been tinkering with the user interface, but the way people are listening to music — and their attitudes toward ownership of content — are changing. It’s been reported that Apple is working to develop a “Spotify-like” streaming web radio service that would be interspersed with its own iAds. While iTunes still sells the vast majority of individual tracks, the experience is lacking when compared to more seamless and popular subscription music services like Pandora(s P) and Spotify. Apple’s problem is that iTunes has become clunky software that encompasses so much more than music: there are also videos, apps, podcasts, iTunes U and books. Next year could be when Apple gets back to its digital music roots and appeals to users looking for a simple, streaming, music-focused app customized to their listening preferences. —Erica Ogg (Image courtesy Shutterstock / Elaine Barker)

More experimentation in mobile payments

Square Wallet, StarbucksApple has dipped it its toe into mobile payments and commerce with Passbook, which allows people to hold on to their coupons, tickets and loyalty cards in a single app that presents information on the iPhone’s lock screen. But the potential is there for Apple to go even further: by using its millions of credit cards on file to create a Passbook-enabled payment system that can work at retail locations. Passbook already allows Starbucks Card(s SBUX) users to pay with their iPhone when they get to a store. Apple has so far declined to include NFC in the iPhone and it may never integrate the technology. But it doesn’t need to if it relies on geo-fencing, barcodes or other possible mobile payment methods. Apple could also integrate payments with iAds to help deliver local offers or even allow people to pay directly for a product from an iAd, helping make mobile ads more attractive. This would be a big step for Apple and would require a lot of collaboration with merchants online and in stores. Apple might just start with a digital wallet approach, making it easy to pay for online goods first with an iTunes log-in and password. That would compete with PayPal,(s EBAY) Google Wallet and offerings from credit cards like V.me from Visa. Eventually, Apple could move in-store using Passbook. — Ryan Kim