Last Monday, Steve Jobs broke his medical leave and graced the stage at Apple's WWDC conference to make what was most assuredly one of the company's biggest announcements of the year. As far back as 2009, rumors had circulated that Cupertino was planning to take its immensely popular iTunes music player and store to the cloud—a final frontier with obvious and enormous potential to revolutionize both the way we consume and purchase music. Indeed, in many ways, harnessing the power of the internet via the cloud seemed predetermined as the biggest and most disruptive advancement for iTunes since the creation of the store itself in 2003. But what Jobs actually announced on stage last week was hardly a revolution. In fact, iCloud's myriad of features, convenient though they may be, seem like both a material and conceptual stop-gap when considered in the context of the wide range of cloud-based services already available. For a company that has led the charge on so many other frontiers in the past, this is seriously strange.

Apple has an Internet problem. If you think about it, despite the incredible convergence of hardware, software, and the Web that has taken place over the past 10 years (this happened just yesterday), Apple, which makes both hardware and software, has not made a single notable Web product outside of the Safari browser.

In some ways, this is understandable. The company's hardware business, as you might have heard, is going like gangbusters. But if there's one thing that technologists of all stripes can agree on, it's that the future is online. Pretty much every leading tech company not named Apple that's driving innovation, including Eric Schmidt's "Gang of Four," is fundamentally an Internet business. Even Microsoft has been working with the cloud for years. But outside of the short-lived, underdeveloped, overpriced MobileMe service, Apple has curiously bowed out of the Web movement and is increasingly being left behind.

iCloud's shortcomings speak volumes. It's the only cloud storage solution that doesn't offer a centralized hub for managing your media online. The music iteration, via iTunes, is the only cloud music service that doesn't bother to let you stream the music you have dutifully stored on the Web. By making its iOS devices themselves the forefront of iCloud, Apple has defaulted again to hardware in an arena that is clearly meant to be exploited online. Instead of creating a new service for truly managing our lives on the internet, Cupertino effectively tacked on an additional feature to its existing line of products.

Apple's penchant for closed systems tied to preexisting products and services is notorious and longstanding. The iTunes Store to this day is inexplicably the sole domain of a desktop or mobile application when a web store and streaming outlet at, say, iTunes.com, seems like an obvious slamdunk for edging out competition from Amazon and Netflix. And remember Ping? Apple's forray into social networking? No? Well that's probably because it was the only social network that you couldn't get to from a web browser—Apple buried it in iTunes (it still technically exists).

The internet isn't something that Apple can keep subservient in the background of its various wares. As Google has proven with its enormously successful suite of web products like Gmail and Google Docs, the internet is increasingly the be-all-and-end-all of personal computing. What Apple needs is an entirely new platform for consumers that lives and breathes online. That's what iCloud should be.

Diversifying into a new sector is not easy, but when done well, the benefits for the company are often unfathomable. Think of Amazon, an e-retailer that raised eyebrows by deciding to build hardware and ended up becoming the manufacturer of its own perennial best seller. Or of Google, the quintessential Internet company that has become a crucial thought-leader in both software and hardware with the Android OS and the Nexus phones. Or Netflix, the little DVD-rental company that could, which has exploded thanks to its embrace of streaming online.

Apple, typically all innovation and lust, has allowed itself to fall dangerously behind when it comes to the most critical battleground of the 21st century. Cupertino is thriving on the strength of its hardware business, but it can't ignore the web forever—no one can. iCloud, in its announced conservative form, doesn't aim nearly high enough.

—Reggie Ugwu (@ocugwu)