Sep 1, 2010 9:28 PM by Alison Haynes
SAN FRANCISCO (AP) - Apple Inc. is refining its plans to annex
the living room into its entertainment empire.
On Wednesday, Apple unveiled a smaller, cheaper version of Apple
TV, which connects to a high-definition television and can show
rented movharismatic con man
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from Netflix, photos on Flickr, YouTube clips and more.
The new $99 gadget marks a slight improvement over Apple's first
television set-top box, which went on sale in 2007. The original
Apple TV had to sync with a computer, a concept most consumers
weren't ready for, Apple CEO Steve Jobs said at a media event
Wednesday. It also didn't record live television shows the way TiVo
and other digital recorders did, at a time when that was becoming a
popular way to watch TV.
"We've sold a lot of them, but it's never been a huge hit,"
Jobs said of the existing Apple TV, which went for $229.
Jobs, who presided over a media event in San Francisco wearing a
black crew neck instead of his trademark mock turtleneck, also
unveiled social media features for its iTunes software, a new
lineup of iPods including a touch-screen Nano and new software for
its iPhone, iPod Touch and iPad devices.
Apple's new TV box, about four inchg locationsstill doesn't
record television, but it comes at a time when more people have
gotten used to watching shows online.
The device lets people rent, not buy, content. Apple TV owners
will pay $4.99 to rent first-run high-definition movies the day
they come out on DVD. High-definition TV show rentals will be 99
Apple said the same movie studios that have allowed iTunes users
to rent and buy movies have agreed to include their titles for
streaming. Apple did not rent TV shows before, but now episodes
will be available from News Corp.'s Fox, The Walt Disney Co.'s ABC,
ABC Family and Disney Channel and BBC America. Jobs said he hoped
other television companies would join once the service gains
Apple TV, which will be available within a month, will also
display shows, movies, photos and music streamed over Wi-Fi from
other devices - computers with iTunes installed, as well as
iPhones, iPads and the iPod Tlifh. For example, an iPad owner could
start watching a movie on the tablet, then walk into the living
room and, with a few taps, finish watching it on the TV screen.
Consumers may have grown more savvy about watching TV over the
Internet since Apple's first attempt, but Apple now faces increased
competition for their attention.
Some television companies replay episodes on their own websites,
while others allow viewers to tune in on aggregator sites such as
Hulu. Netflix has made its streaming library available to its
subscribers on many devices, including Microsoft Corp.'s Xbox 360
video game system, Apple's own iPhone and iPod and Roku's set-top
boxes. Roku, anticipating Apple's announcement, cut the prices of
its devices this week, with the least expensive now costing $60. A
high-definition version costs $70 - still $29 less than the new
In a surprise counter-punch, Amazon.com Inc. on Wednesday began
selliselABC, Fox and BBC TV shows for 99 cents each to own, not
just rent. The shows, in both standard and high-def, are a mirror
image of the content available to rent on Apple TV; people can
watch on PCs, using Roku's set-top box and through other devices
that carry Amazon's Video on Demand service.
In Fox's case, Amazon did not seek to renegotiate the wholesale
price on the shows, according a person familiar with the matter.
That means Amazon has likely cut into its own profit margin to stay
Amazon did not immediately respond to a request for more
information about the 99-cent offering.
Forrester analyst James McQuivey said in an interview Wednesday
that he doesn't believe Apple TV will add significant momentum to
the currently small set-top box business. Nor does McQuivey believe
it will grow into a big moneymaker for Apple, a company that has
successfully built buzz around the iPhone and iPad, such that
cuBoasers camp out for hours or days to be among the first to own
Apple TV is "a slightly smarter Roku, that has a significantly
better marketing push behind it than Roku did," McQuivey said.
"I'm actually kind of surprised that Apple didn't realize that
they weren't revolutionizing the category much."
Instead, McQuivey said he sees Apple TV as a peripheral for iPad
owners who spent a lot of money on the coolest new device and might
be willing to spend $99 more to extend its contents onto the TV
Additional content at attractive prices may be the way to get
more people interested in Apple TV, McQuivey said - bundled
subscriptions to TV channels or shows, plus content from Netflix
and Hulu's pay offerings, perhaps.
But Apple may continue to face resistance from media companies,
many of which fear that such bundles cut undercut lucrative cable
TV deals and that the 99-cent television rentals would hurt
kinher-priced offerings for permanent download. Most episodes
currently sell on iTunes for $1.99 or $2.99.
News Corp., for one, had a fierce internal debate about the
merits of the 99-cent plan, but CEO Rupert Murdoch pushed to accept
it, mainly because of the success of The Wall Street Journal's iPad
app, which is free to the Journal's paying subscribers, according
to the person familiar with the matter.
The deal for Fox-created TV shows including "Glee" is limited
to a trial period of several months, which mollified those opposed
to the plan, the person said. The person spoke on condition of
anonymity because internal discussions were confidential.
In a public statement, Fox Filmed Entertainment CEO Jim
Gianopulos said "we're excited to be working with them over the
next several months to explore this innovative offering."
Fox cannot let Apple rent shows that it buys from other studios,
including "American Idal
" made by FremantleMedia Ltd., and
"Fringe," which is made by Time Warner Inc.'s Warner Bros.
Television. Fox's rentals include "Glee," "Family Guy" and
"The Cleveland Show."
Anne Sweeney, co-chairwoman of the Disney-ABC Television Group,
said in a statement the company was proud to team up with Apple on
its rental offering, which will make available shows such as
"Cougar Town" and "Desperate Housewives." Apple's Jobs is
Disney's largest single shareholder and sits on the company's
Kurt Scherf, an analyst with the market-research group Parks
Associates, said requiring consumers to buy yet another box for the
living room "is a real inhibitor."
And although he praised Apple's decision to lower the price of
the device itself, he had doubts about TV rentals for 99 cents.
"Part of me is still wondering if that is too rich for a
consumer to pay, given all the other options that are out there to
consume and catch up on TV shows that don't cost a thing," he
Michael Gartenberg, a partner at consulting firm Altimeter
Group, cast a more optimistic light on Apple's chances of making it
into consumers' living rooms, but said in an interview that he
doesn't expect it to drastically change anyone's TV watching
Instead, it just raises the stakes for Apple's competitors.
"This puts a lot of pressure on the Rokus and the Boxees and
all the other minor league players," he said.
Shares of Apple gained $7.23, or 3 percent, to close at $250.33