Maybe Apple figures that with Nintendo swimming in money they must have tapped a market that could stand an extra competitor.

Entering into the videogame market at this point in time is a foolish move ...

Several companies have tried to enter the market and the only successful ones have either lost a ton of money (Microsoft) or were remarkably lucky (Sony); for those who don't understand why Sony was lucky, they entered into the market when Sega and Nintendo made huge mistakes which would limit their popularity.

(The following may be seen as flamebait to some but quite frankly I'm going for it!)

Apple entering the gaming business and showing Sony how to REALLY do overpriced!

:D

I think you're assuming too much when you say they'd need to get exclusive content. As it is, we know a large number of PS3 owners are buying that device for more than gaming or outright non-gaming capabilities. As was said, this would probably just be an extension of their AppleTV product.

They don't want to compete in the traditional sense. They've seen MS lose billions on that path and would never follow it. But they could easily make a device that plays games almost as good as 360 quality out of a device that's already being sold as a home entertainment hub. From there they would just sell products for whichever 3rd party wants to take a shot on it. They can do ports all day long if they want, too, because the typical Apple product buyer will get the thing regardless of whether or not it plays games and then they'll buy a couple just because it does.

And people have proven that they will buy the Wii for WiiSports. If the system has any sort of new interface or motion interface, they won't have to try hard to sell the thing on innovation rather than capability. That's sorta how Apple works, ya know?

An iPod with more games, better controls and TV-out?

Except that the PS3 was actually underpriced for what it did.  They just wanted it to hit mass market asap.  If they would have had an extra year to launch the thing would have only been $400.  Apple will not release a product that expensive.  It would assuredly be a $~300 machine and simply wouldn't be built to compete with the PS3 in graphics.  Apple knows their consumer is the same as the new Nintendo consumer.  Which is to say they don't care how the game looks, they care how fun it is to play. 

There is no incentive to Apple to put high tech stuff in there.  If they can do a little better than the Wii and handle a significant portion of what the 360 does and sell it at a profit from day one, ala Nintendo, they'll come out rosier than Sony or MS this gen just because of how they distribute their content.

Actually if you put the markets for the iPod and MacBooks into context really then yes: the market DO care more about style than substance. I'd say it's pretty much solid fact that there alot of MP3 players out there that piss on the functionality of the iPod, the only major difference being (and this is important to alot of people seemingly) that they don't look as nice as iPods do. Apple hardware is absurdly overpriced, and it's not because it's great either (which it is), but because it IS Apple hardware. 

I'm not trying to go off topic here, but I'd easily see Apple simply not trying if they did enter the console market. As long as they stick that logo on it, make the product super sleek and shiney then the sheep won't give a crap and could possibly gobble it up!

These days, owning an Apple product is more of a fashion statement than anything else, and really I think Apple know this. I don't think they'd stay alive five minutes in videogaming.

And that's all they'd need. They don't need to compete with the existing consoels at all. And it won't, just in the same way that Wii doesn't compete with the HD consoles. They each have a different purpose and just happen to cross paths in a number of areas. And Apple being Apple can make their own niche in a similar but not necessarily the same area.

In the perspective of videogaming though, what can Apple really do to make them stand out? Nintendo are winning the generation for obvious reasons. Out of the Powerhouse Consoles as I like to call em, the 360 to many would seem more attractive for it's brilliant online capabilities and gamerpoints. The PS3 is definitely attractive as a multimedia hub (not so much a gaming console if you ask me but I digress...).

 If Apple did enter the console market, I'd see them trying to take Sony's route and putting the emphasis on multimedia rather than gaming itself. I don't see Apple supporting Blu-Ray or HD-DVD, and MS seem to be subtly pushing digital content forward on 360 so again I ask: What could Apple really do to make them stand out if they did enter the console industry?

 Like I said before, Apple can expand all they want, but I think this is one area they'd fall short very quickly.

Apple will be Apple, that's what. They already have (one of) the best content delivery system in place. MS and Sony are still scrambling to set something up that's even remotely comparable. Apple will be able to just say: "sure, our competition is trying to do what we do but we actually, you know, do it. Out of the box, today, not sometime in the future like our competition."

While Apple can't compete on the gaming side, that's simply not what they want anyway. They want to run the content delivery system, not make the content. And if you say "our machine is in 10 million homes and can play games as well as the Wii and nearly as well as the 360" then 3rd parties will be happy to develop games for your system.

The gaming aspect of such a product would not be the meat and potatos, as it were. It'd be the gravy. Extra money on top of Apple's primary source of income. They really don't want to make the games, they just want to sell them.