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Apple TV's updated functionality provides access to movie rentals and HD content

(Credit: Apple)

Update: Check out three related videos with more info on the forthcoming Apple TV upgrade: Steve Jobs comments during his keynote address; the video guided tour on Apple's Web site; and a summary from CNET's Donald Bell. This post has also been updated since its original publication with additional information.

The Apple TV just got a whole lot more useful.

Steve Jobs unveiled a major feature update to the Apple TV today during his Macworld keynote address in San Francisco that aims to transform the device from a TV-based iTunes media viewer to a more full-featured media-on-demand device. The hardware will remain the same, with the entry-level 40GB model dropping from $300 to $230, but a free software upgrade--available in two weeks--will add the following functionality:

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The MacBook Air, unfurled today, might be the thinnest notebook on the market today, but it's not the thinnest of all time.

(Credit: Daniel Terdiman/CNET News.com)

That distinction belongs to the Pedion, an ill-fated notebook developed by Mitsubishi and Hewlett-Packard back in 1997.The Pedion measured 18.4 millimeters thick, which comes out to 0.7244 inch thick. Although the Air gets to 0.16 inch at the thinnest point, the Air is 0.76 inch thick at the beefiest portion, making it minutely thicker. Mitsubishi released the Pedion in early 1998.

The Pedion, however, wasn't exactly the paragon of quality or value. The $6,000 notebook came with 64MB of memory and a 1GB hard drive. The notebook came with a magnesium case to make it sturdy. Even with that, though, consumers quickly reported mechanical and other problems. Mitsubishi subsequently withdrew the notebook from the market. (HP never came out with its version, I don't think. I'll check.) The name probably didn't help either. "Attention Circuit City employees. I have a Pedion on aisle one."

Apple calls the Air the world's thinnest notebook. How you interpret that ("on the market today" or "ever") is up to you.

Others have come close but not limboed under. A special-edition Sony Vaio X505 sold back in 2004 comes close to the Air. The notebook, issued in limited numbers to commemorate the Vaio line, measured 0.8 inch thick at the fattest point and 0.38 inch at the thinnest. Part of the shell was made of carbon fiber for strength.

Sony's thinnest notebook now, meanwhile, measures 1.2 inches thick at the fattest point and 0.8 inch thick at the thinnest point. (If you asked me in college if I'd be arguing notebook thinness as a grown up, I would have laughed.)

Although the Pedion died a quick, ugly death, some of the ideas behind it linger on, and one of those ideas is the thin notebook with a medium-size screen. Back then, most mini-notebooks came with small screens and keyboards. The Pedion had a 12-inch screen, big for the time, and a relatively normal-size keyboard. In other words, it had normal X and Y dimensions, but a small Z. The formula has been popular ever since.

Although notebook makers have for the past few years focused quite a bit of attention on notebooks with 15-inch and larger screens, the new battleground will be in the 11-inch and 13-inch screen arena, predicted Xavier Lauwaert, a Vaio product manager. These notebooks are roughly similar to dimensions of the old Mitsubishi model.

Dell recently put out a light notebook with a 13-inch screen, while Sony showed off 11-inch and 13-inch models at CES. The Air fits in the same category.

"There will be a war around thinness, battery life, and price/performance. You can see this is where everyone is going," Lauwaert said. In these notebooks, optical drives become an option.

Manufacturers will also have to explore chemistry labs as well to find new materials similar to carbon fiber that can be fashioned into thin chassis.

Apple CEO Steve Jobs once again managed to impress a Macworld crowd during his keynote address Tuesday morning by introducing an ultrathin laptop called the MacBook Air, which the company touts as the world's thinnest notebook.

Jobs also introduced a movie rental service (watch the video), which he said has the support of all major Hollywood studios. In addition, he announced Mac Office 2008; a backup appliance called Time Capsule; and new features for the iPhone, iPod Touch, and Apple TV.

Jobs said the MacBook Air has a 13.3-inch LED backlit screen and a full-size keyboard. The computer measures 0.76 inches at its thickest and 0.16 at its thinnest. It's so slender, Job said, it fits into an inter-office mailing envelope.

Most ultraportable notebooks have miniature keyboards and 11-inch to 12-inch screens.

The MacBook Air weighs about 3 pounds, comes with 2GB of standard memory, an 80GB standard hard drive, and 802.11n wireless connectivity. It will cost $1,799 in that configuration, and shipments are expected to start in two weeks.

Other features include Intel's Core 2 Duo processor, a built-in iSight camera, and the ability to move a photo around on the touchpad with two fingers.

As many people expected, Jobs also announced iTunes movie rentals, with participation from major studios including Touchstone, Miramax, MGM, Lionsgate, and New Line Cinema, as well as Twentieth Century Fox Film, Warner, Disney, Paramount, Universal, and Sony.

"We have every major studio," Jobs said. But the company had to make a concession--the films won't be available until 30 days after the movies are released on DVD.

Films cost $2.99 for library titles and $3.99 for new releases. They can be watched on any device, instantly. Renters have 30 days to watch a movie after it's downloaded, but only 24 hours to watch it after it starts playing. The service is up and running now, and Jobs said the library should be built to 1,000 films in February.

Jobs also announced updates to Apple TV, which can now be used directly with a television and access iTunes without the need for a computer to play middleman. Apple TV has a new user interface that allows people to sort through movies in the same way they can with Cover Flow. Users also will be able to view photos from Flickr and Picasa. A free software upgrade delivers those new features, and a new Apple TV with those features will now cost $229.

In other product announcements:

• Time Capsule is a "backup appliance" that looks much like the Mac Mini or Apple TV. It's basically a wireless access point with a hard drive, enabling consumers to back up their notebooks wirelessly. It's expected to ship in February and costs $299 for the 500GB model and $499 for the 1TB model. (Watch a video of Jobs introducing Time Capsule.)

Click for video of latest iPhone updates.

• Some new iPhone features include an application called Maps, which can approximate your location; the ability to customize the home screen; the capability to send text messages to multiple people; and the option to view lyrics for songs you're listening to.

• Apple is adding five applications to the iPod Touch, including Mail, Maps, Stocks, Notes, and Weather, which make the iPod Touch much more like the iPhone.

Apple shares went down more than 5 percent to $169.62 in afternoon trading. And although the overall market was also down on Tuesday, the Macworld announcements didn't exactly seem to wow investors.

CNET News.com's Tom Krazit contributed to this report.

This entry was updated at 3:15 p.m. PST to better explain changes to Apple TV.

'Spore' in action.

(Credit: Daniel Terdiman/CNET News.com)

This post has been updated to confirm when we should expect an official announcement from EA.

As has been anticipated, Electronic Arts is set to announce Tuesday that it will be bringing its highly anticipated game Spore to the Mac sometime in 2008. It's a big deal, because PC and Mac versions of a game are often released months apart, if at all--some major game manufacturers skip the Mac platform altogether because they simply don't see the market value. EA, however, plans to bring Spore to both platforms simultaneously.

The announcement has been timed in conjunction with--you guessed it--the Macworld Expo.

The premise of Spore, the latest project from SimCity and The Sims creator Will Wright, is to evolve a custom creature through the entire evolutionary process, starting as a one-cell organism and eventually going on to turn it into a highly evolved being that can conquer intergalactic societies.

EA representatives told CNET News.com that an official announcement should be out around 12:00 p.m. PST time on Tuesday.

Quickly filling up Netflix's rearview mirror is a sight that no tech company wants to see: Apple.

Apple announced on Tuesday that the company has cut licensing deals with every top film studio--deals that will enable iTunes to offer first-run movies a month after they are released on DVD.

This means that Apple has won a major advantage in the Web movie-rental business. One of the biggest complaints customers have with online movie services is that none offer first-run features. The same is true with some of the video-on-demand services operated by the cable companies.

Moreover, Netflix offerings don't work on anything but computers running Microsoft's operating system.

Apple CEO Steve Jobs told the audience during his Macworld 2008 keynote address on Tuesday that movies offered by the service, iTunes Movie Rentals, will play on PCs, Macs, iPods, and iPhones.

Apple also one-upped most competitors by offering films in high definition (HD). Jobs told the Macworld audience that customers can watch the streaming movies instantly. They will have 30 days to start watching the moves and once they begin streaming the film and will then be allowed 24 hours to finish viewing.

Apple will charge $3.99 for newer releases and $2.99 for older titles. Customers can pay $1 extra to obtain movies in HD. The company expects to offer 1,000 films by the end of February.

"The big surprise is that they're doing HD," said James McQuivey, an analyst with Forrester Research. "Apple nailed this because HD is what consumers want."

Apple's new rental service isn't likely to threaten Netflix's core mail-order business, according to McQuivey. Apple is charging on a per-film basis while Netflix business allows users to watch what they want for a monthly fee.

But the future of movie rentals is supposed to be providing customers access to any film with a push of a button. Nobody offers that--yet. But in the race to deliver instant gratification, Apple just zoomed past Netflix.

Still, the Web rental business as a whole has many shortcomings. Some are technological and some are the annoying restrictions imposed by the studios.

Transmitting movies over the Web, especially in massive HD-quality files, is known for taking multiple hours. The viewing experience, meanwhile, is often marked by stalling and jerky video.

Among Apple's competitors is Microsoft's Xbox. The company launched a movie and TV download store for Net-connected Xbox 360s in November and some users have complained about hours-long delays in getting their films. What Apple fans will be interested to see is what kind of viewing experience Apple can deliver.

One thing that is bound to annoy them is the viewing deadline. That isn't Apple's fault, according to McQuivey.

The reason for the deadline, he said, is that the studios insist on it because they don't want movies sitting on people's hard drives for too long.

"Their worry is that this would discourage people from picking up the DVD at Wal-Mart," McQuivey said. "The DVD market is $23 billion a year, twice as big as the annual box office revenue. The studios don't want to mess with that if they can help it. At least for now."

The long-rumored mini notebook from Apple could be making its debut relatively soon, the AppleInsider blog is reporting.

Citing "people familiar with the matter," AppleInsider says the latest notebook form factor from Apple will be introduced at January's Macworld Expo, held every year in San Francisco. Over the past year, several clues have pointed to Apple developing an ultraportable to round out its notebook lineup.

The report says the computer will have a 13-inch LCD screen, which will be lit by LEDs (light-emitting diodes) like the current MacBooks, and weigh 50 percent less than the current model 15-inch MacBook Pro. AppleInsider also says the ultraportable will use flash memory instead of a traditional mechanical hard drive. What it won't have, is equally notable: apparently Apple nixed an optical disc drive to maintain an ultraslim design.