Apple Inc unveiled a smaller, cheaper version of its Web-to-TV device on Wednesday, stepping up a battle with Google Inc and Microsoft Corp for control of the digital living room.
Apple co-founder Steve Jobs also rolled out a completely overhauled lineup of iPod media players and the latest version of iTunes, with a new logo that does away with the outdated image of a CD.
The new Apple TV device, which accesses content from the Internet and plays it on a TV, will sell for US$99. It is a quarter the size of the original, which cost US$229.
PHOTO: BLOOMBERG
The device allows users to rent TV shows for US$0.99 and first-run films for US$4.99. Earlier models, which allowed users to only buy shows, failed to find a major audience.
The biggest shift to iTunes is the introduction of a social networking feature called Ping, which allows users to recommend songs to followers or their chosen circle of friends.
“It’s Facebook and Twitter meets iTunes. It’s a social network all about music,” Jobs said at a presentation to unveil the products on Wednesday.
But the centerpiece of the event for reporters and investors was Apple TV, which the company introduced in 2006 but which never became a big hit.
MORE THAN A HOBBY
Jobs once referred to Apple TV as a hobby, but made clear that the company was now ready to seriously focus on marrying the Web to TV, a combination that is also in the sights of some of the world’s most creative and deep-pocketed companies, including Google, Microsoft and Amazon.com Inc.
“They’re beginning to shift the paradigm for a very entrenched behavior,” said Altimeter analyst Michael Gartenberg, who attended the event. “TV viewing hasn’t changed that much in 50 years. They’re trying to shift that behavior the way they shifted phone behavior.”
Alongside renting TV shows and movies, Apple TV users will be able to stream content from video rental site Netflix Inc. Netflix shares closed 7.5 percent higher on NASDAQ.
Analysts were lukewarm toward the device, though some saw it as only a small, initial step in a much more ambitious plan.
“What they showed was an improvement from what they had before, but it’s not as far reaching as it could have been,” said Daniel Ernst, an analyst with Hudson Square Research.
Others doubted whether users would pay to rent TV shows on top of their cable bill and suggested TV networks would be wary of allying with Apple.
“The content companies have to be careful not to destroy any of the value to their ecosystem because the cable bundle is really valuable and breaking apart content into individual pieces is risky,” Needham & Co analyst Laura Martin said.
Apple said it had struck rental deals with Walt Disney Co’s ABC and News Corp’s Fox.
“We think the rest of the studios will see the light and get on board pretty fast,” Jobs said.
SLOWING GROWTH
Jobs spent most of his presentation on a snazzier line of its iPod, which dominates the music and media-player market with 275 million units sold, but has suffered moderating sales in recent years.
Jobs has turned his attention toward the iPhone and more recently the iPad, which became an immediate success when it was launched in April.
The company has revamped its product line ahead of the key holiday sales season. Jobs called it the “biggest change in the iPod lineup ever.”
But Rodman & Renshaw LLC analyst Ashok Kumar said the new products wouldn’t stop his expectations for iPod sales to stop growing after this year as they will be cannibalized by sales of devices such as iPad and iPhone.
“We think this year the iPod category will peak and then start to decline,” Kumar said.
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