Apple Debuts New Apple TV Strategy, Streaming Media, Netflix Integration

Apple Inc. is taking another stab at facing down telcos and cable companies for the in-home TV opportunity. It unveiled a new, $99 version of Apple TV on Wednesday, which ditches content purchases in favor of inexpensive rentals and cuts the size of the box down to a quarter of its previous bulk. Steve Jobs famously has called Apple TV a hobby” compared to the companys other initiatives, but that status may be about to change.

With Steve Wozniak looking on from the audience, Jobs took the stage at Apples annual music-focused press event, and said consumers want the hardware to be silent, cool and small. While he acknowledged that Apple TV has been less than a resounding success to date, he said the company is responding to the market now.

Notably, the device which is about the size of two iPhones placed side by side hooks into the television and requires no synching with a computer everything can be streamed OTA. Content will now be cheaper (99-cent TV episodes from Fox and ABC, and $4.99 first-run movies will be available on iTunes), and the box incorporates Netflix streaming (a big plus) and YouTube, along with iTunes audio and photo streaming. Its generally a compelling offering for television viewers, who simply want to be able to flip on their TV and watch what theyd like to, on-demand. The pricing scheme stacks up nicely to cable subscription and on-demand movie options, though the content stable is admittedly a bit shallow for now. While ABC and Fox are the only two studios offering Apple the cheap episodes, “we think the rest of the studios will see the light and get on board with us,” said Jobs.

Because the content is rented and not purchased, the second-generation box eliminates the need for big hard drives, content management systems and a large form factor. That means the hardware and support costs are cheaper which is why Apple is able to knock $200 off the previous pricing. Apple TV is available for pre-order and will ship in four weeks.

There was some synergy in the room with other lines of businesses, another potential red flag for operators. Jobs also unveiled upcoming functionality for iPad, iPhone and the iPod Touch, including AirPlay, which will let users stream audio and video, and push pictures, to other devices via Wi-Fi. AirPlay, part of the iOS 4.2 mobile device OS that will be released in November, is a refresh of the existing AirTunes functionality. It adds the video and photo streaming support and works in a two-way fashion: It lets music and video stream from a computer to an i-device too. And the 99-cent TV show rentals from Fox and ABC meanwhile will be available starting next week, which will make the AirPlay streaming capability that much more interesting when it comes along later in the year. Imagine renting a (cheap) TV show and streaming it to an Internet-connected TV, for instance.

“You are going to be able to be watching a movie, come into your living room and press a button and continue watching it on your TV,” Jobs said. It is going to be pretty cool.”

Jobs in his demo said this was all about the iPad,” but selected models of the iPhone and iPod Touch will also be supported.

The Other Announcements

Apple TV made a splash, but Jobs took the wraps off several noteworthy items. iOS 4.1 will be available next week for the iPhone and iPod Touch (iPad will have to wait for 4.2), containing a few important and immediate upgrades. Apple is including plenty of bug fixes, for everything from the iPhone 4s proximity sensor to a Bluetooth fix. It also adds High Dynamic Range (HDR) photo capability, and will let users upload HD video to YouTube and other sites.

Jobs also unveiled Game Center, which improves one of the most-used aspects of the device. Gaming is a cash cow for Apple and the company is supercharging the proposition with a multiplayer, interactive, social network-inspired dimension. Players can list friends to play with, and, if they dont have any to specifically connect with, Game Center will match them to people of similar ability and interests. Players can compare scores, follow leaderboards and achievements, track records and follow what games their friends are playing.

The HDR photo capability is a fix for washed-out and dark pictures the iPhone has been known to take. The HDR function takes three photos: one in normal exposure, one underexposed and one overexposed. The three are then combined to sharpen the visibility of images.

iOS 4.2, when it arrives in November, will also bring wireless printing to the table as a new menu option in the Tools menu. Print Center” pops up in the multitasking bar at the bottom of the display. Users can have multiple printers registered, choose which one to use, and which pages to print. They can also cancel print jobs.

Jobs added some metrics to the mix during the event: Apple has shipped 120 million iOS devices since the iPhone launched a few years ago, and its activating over 230,000 per day. More than 6.5 billion apps have been downloaded from the App Store, and 200 apps are downloaded every second. There are over 250,000 apps in the App Store, and 25,000 are iPad apps.

The event was mainly an iPod event, and Jobs took the wraps off completely overhauled versions of each iPod flavor, along with a social network for music, called Ping.

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