It's a good thing Apple (AAPL) doesn't actually need its home entertainment business to make any money.

While Apple's competitors continue to improve in the Web-to-TV-gadget market, the Apple TV set-top box hasn't received a major update in more than 18 months. (And sales can't be impressive: It's currently numbers 575 and 1,104 on Amazon's best-selling electronics list.)

The latest competitor to step things up: Roku, whose Web video set-top box is $99, or $130 cheaper than Apple's, and continues to add cool features to its box that Apple TV does not have. Last night, Roku added the ability to stream live Major League Baseball games in hi-def to your TV. It looks gorgeous.

Roku is going to keep adding new video and audio sources in the next several weeks, in addition to the Netflix and Amazon streaming it already supports. Other rivals are getting better, too, like Microsoft's Xbox 360.

It's surprising that Apple, which has had so much success with its iPhone App Store, hasn't yet brought a similar framework to the Apple TV. Maybe that's the next step -- it would certainly make the hardware more attractive. (Or maybe they've just been waiting to ship one with Blu-ray.)

We had heard secondhand earlier this year that Steve Jobs didn't want to invest more in Apple TV hardware until its software is improved. That explains why Apple hasn't done much with Apple TV hardware since it launched in 2007. But it doesn't explain why the company hasn't done much with the software since then.

Perhaps the best news is that this market is still tiny and niche, and Apple can still catch up quickly. Apple's real competition here -- and Roku's, and Microsoft's -- is going to be the cable company that owns your broadband pipe and your existing TV set-top box. So that's who Apple should be thinking about disrupting.

Opening the Apple TV up to any content provider who wanted to distribute video to it -- like MLB.TV, Blip.tv, and especially iTunes rivals like Amazon and Netflix, who don't compete with Apple's hardware business -- could help. But who knows if Apple's inner control freak will ever allow that to happen.