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By Carl Howe

Apple's (NASDAQ:AAPL) invitations to today's event read, "It's Showtime." And what a show it was!

To be fair, we had predicted many (but not all) of Steve Jobs' announcements today in San Francisco last week. And most of the items announced fell right into line. It started with Jobs noting that iPod connectivity is an option in 70% of the new cars sold this year (that will become significant at the end). We also heard about:

  • Movie downloads. As expected, Apple launched a new iTunes Store that supports full-length movie purchases and downloads. Price points are as expected: $14.99 for the latest releases, $12.99 if you pre-order or buy in the first week of availability of a movie, and $9.99 for older titles. Apple also added a variety of new TV content, including NFL football highlights for $1.99 each and $24.99 for a season pass. And the resolution of these shows all went up to 640x480 -- not quite 480p resolution, but very close. But sadly, DVD burning isn't allowed. That means that watching these movies on your couch on your big screen TV is out of the question -- at least until early next year as you'll read at the end of the article.
  • iTunes 7 music player. Apple updated its market dominating music player to now feature album art downloads for all the music in your music library, provided you have an iTunes account. It also dramatically steamlined to make it easier for you to find music, videos, and movies. Particularly impressive were the new capabilities to have both gap-less music, loss-less compression, and scan through your music by album art, a feature Apple calls Album Cover Flow.
  • Sixth generation video iPods. The latest iPods, despite being widely predicted, are decidedly not what most people predicted. The form factor hasn't changed from the fifth generation, but the price has. These iPods are now available for $249 for the 30 gigabyte version (7,500 songs) and $349 for the new 80 GByte version (20,000 songs). And now there are casual games such as Tetris, Pac Man, and Mahjong available for iPods from the iTunes store for $4.99 each.
  • Larger capacity, thinner, and colorful iPod nanos. Jobs also used the event to update one of Apple's most popular iPods, the iPods nano. The form factor has become thinner, but the product line broader. These systems are now available in 2 GByte ($149 in aluminum color only), 4 GByte ($199 in blue, pink, green, and silver), and 8 Gbyte ($249 in black only).
  • New iPod shuffles. The low end of the iPod product line got a refresh to be square, aluminum, and incredibly tiny. And it now sports both a belt clip, better headphones, and a new price: $79 for a 1 GByte player.

"Showtime" at Apple

But of course the splashiest news was that Apple finally made its first foray into the living room with the iTV (not its final name). This is actually a pre-announcement, since Steve said the product will not be available until Q1 2007. But it looks a bit like a Mac mini, but hosts a huge variety of outputs -- HDMI, WiFi, FireWire, component video, analog video, and optical digital audio. It also boasts a wireless connection and is supposed to be everything you need to connect your computer to your home theater system. It's the missing link between the computer and the living room -- and should finally allow consumers a proper theater experience -- the ability to view movies on their sofas instead of in front of their computers. Steve actually demonstrated one working and displaying a HDTV movie of the Incredibles. The target price for iTV is $299.

Steve summarized the event with these words:

So, you can download all this great content online. It's:

Now playing on a computer near you
Now playing on an iPod near you
Coming soon to a TV near you

Apple is in your den
Apple is in your living room
Apple is in your car
Apple is in your pocket

Apple's sneak peak at its iTV, an HDTV video box for the living room

What does it all mean? It means that Apple has finally started its march out of the computer room and into consumer living rooms and dens. Apple is repositioning computers, not as a tool for work, but as a tool for entertainment. This is the end computers as IT, and the beginning of computers as TV.

So while there's only one major movie distributor "on board" now, expect the rest to join up, just as the music labels did with the iTunes Music Store. Because despite companies like Microsoft (NASDAQ:MSFT) trying to build complicated ecosystems with hardware from one company, software from another, and content from a third to satisfy the consumer, Apple is pulling all the pieces together under one brand to make it simple and easy to buy. And as they make more inroads into your den, your living room, your car, and your pocket, that value proposition will become harder and harder for consumers to resist.

AAPL 1-yr chart:

AAPL 1-yr chart

Full disclosure: I own Apple shares.

Source: Apple Starts Its March Into the Consumer's Living Room