September 11, 2006 2:59 PM PDT
Apple taking iTunes to the movies?
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If the analysts and enthusiasts are on target, the iTunes store and client software will soon offer the option of movie downloads, expanding its offerings from music, television shows and music videos to feature films. Also expected are new iPod Nanos--perhaps with wireless capabilities--to shore up the iPod juggernaut for the holiday season.
As usual, an Apple representative declined to comment on the plans for Tuesday's event at San Francisco's Yerba Buena Center for the Arts.
Most of Apple's public events and press conferences this year have focused on the Mac, as the company completes its transition to Intel's processors with a host of new notebooks and desktops. But iPod revenue contributes a very healthy chunk of Apple's overall revenue, and many analysts believe the company will need some new buzz around the iPod to keep its growth rate on track.
The new Nanos should come with more flash memory for increased storage capacity, and a few new color choices, thinks Gene Munster of Piper Jaffray. If Apple's really thinking about increasing its already-dominant share of the portable music player market, it will probably have a model or two with wireless capabilities, he said.
Microsoft is planning to embed wireless capabilities into its Zune music player, which will also be available this holiday season. Patent filings earlier this year showed that Apple was at least considering adding wireless chips to the iPod, which would allow users to wirelessly stream music or movies from their iPods to stereos or televisions, Munster said.
But the "showtime" part of the Apple press conference is expected to be an announcement that Apple has secured deals with movie studios to distribute films through the iTunes music store. A listing for a $9.99 movie on the iTunes store was spotted in March, and an executive from movie studio Lions Gate said in August that his company had cut a distribution deal with Apple's iTunes. Also, BusinessWeek reported in August that Lions Gate and Walt Disney--where Apple CEO Steve Jobs now occupies a spot on the board of directors--are first in line to sell movies on iTunes for $9.99 to $14.99.
PC companies have mostly flamed out trying to bring digital content into the living room via the PC. Lots of desktop PCs now come with Microsoft's Windows XP Media Center Edition operating system, but it's unclear how many people are actually using that software to connect their televisions to the Internet through their PCs, said Stephen Baker, an analyst with NPD Techworld.
Apple could have an advantage in its iTunes software, which is available on somewhere between 50 million to 70 million clients, and its relationships with content distributors, Baker said. But what the company hasn't done is come up with a product that connects the Mac or PC to a digital television. The Airport Express product can stream music to wireless receivers around the house, but hasn't been updated for video streaming as yet.
"At some point, they've got to start coming to the table with a real digital entertainment strategy. They've got to have something that ties the iPods and music and movie stores to the rest of your home entertainment," Baker said. That could be a new version of Airport Express that is designed for video streaming, or it could be more video-friendly Macs like the 24-inch iMac models unveiled last week, he said.
As always, with Apple events there's never a total consensus among the fan base on exactly what to expect. An updated video iPod with a slightly larger screen gets frequently mentioned as a nice combination with the iTunes movie store. Some enthusiast sites are pointing to the introduction of the long-rumored iPhone, but analysts don't think that product is quite ready for prime time. Another possibility would be new MacBook Pros based on Intel's new Core 2 Duo chip for notebooks, formerly code-named Merom.
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