Apple hopes that film downloads make iTunes a one-stop shop

Apple Computer this week announced it will begin selling moviedownloads from Walt Disney's film studios, aiming to turn its iTunesonline music store into a one-stop shop for digital entertainment.

Chief executive Steve Jobs said Apple planned to ship a device inthe first quarter of 2007 to let consumers stream movies, music,photos, podcasts and television shows from the internet to theirhome entertainment systems.

Code-named iTV, the device will cost $299 ([euro]235) andanalysts said it could solve the entertainment industry's dilemma ofbridging the gap between the television and the computer.

"He has fundamentally closed the loop and Apple has a completesolution," said Tim Bajarin, an analyst at Creative Strategies, ofJobs. "This is a big winner for Apple."

Jobs said the combination of iTV, its Macintosh computer, theiPod and other Apple products will put Apple squarely in homes, carsand consumer pockets as it looks to stamp its mark on the digitallifestyle.

"I hope this gives you a little bit of an idea of where we aregoing," Jobs said at an event in San Francisco, where he alsounveiled new versions of the popular iPod media player.

Jobs said the transformation of the analogue to digitalphotographs is "far along", and is progressing in music. He saidApple is now the fifth-largest reseller of music in the UnitedStates behind Wal-Mart, Best Buy, Target and Amazon.com.

As for movie downloads and tying together the Mac computer andthe living room, Jobs said he was confident Apple would succeed.Microsoft and Intel have pushed media PCs for years, but with littlebroad-based success.

"Everyone who's tried this before has failed," Jobs said. "Wehave a pretty different approach and I think we'll be successfulwith it."

He also suggested more studios would be announcing tie-ups withCupertino, California-based Apple.

Bajarin said: "Any of the other studios would be crazy not tojump on this."

Apple's eagerly anticipated movie service will sell new releasesfrom the Disney, Pixar, Touchstone and Miramax studios for $12.99 ifpre-ordered or bought during the first week available.

Normally, new releases will cost $14.99 and other feature-lengthfilms will cost $9.99.

Jobs said that about 75 films are now available on iTunes, andthat they take about 30 minutes each to download for users with high-speed internet connections. Consumers can view the movies on theiriPods and computers, and eventually on televisions with the upcomingiTV player.

"In less than one year, we've grown from offering just five TVshows to offering over 220 TV shows, and we hope to do the same withmovies," Jobs said.

"iTunes is selling over 1 million videos a week, and we hope tomatch that with movies in less than a year." Jobs, a Disney directorand one of the company's largest individual shareholders, alsointroduced new versions of the iPod with brighter screens and longerbattery life as Apple looks to expand its dominant position indigital music.

Analysts have said it was only a matter of time before Applestarted selling full-length movie downloads via iTunes, which hasalready sold 1.5 billion songs and more than 45 million TV shows.

Apple's push into movie downloads comes when the company isfacing a growing contingent of competitors in the digital musicmarket, including Microsoft, which plans to launch its Zune digitalmedia player this year.

There are already competitors in the nascent movie downloadmarket, including CinemaNow, Movielink and Amazon.

In a note to clients, Goldman Sachs analyst David Bailey saidthat iTV highlights Apple's "ability to consistently lead theindustry and create new markets - all of which should contribute toearnings upside over the next year." Apple shares ended up 13 centsat $72.63 on Nasdaq.