Jan. 15 (Bloomberg) -- Apple Inc. Chief Executive Officer Steve Jobs delivered what investors expected at the Macworld conference. Just not what they wanted.

Jobs today unveiled a slim Macintosh notebook, an online movie-rental service and an updated television set-top box, all anticipated in recent weeks by analysts. Apple, maker of the iPod and iPhone, fell 5.5 percent in Nasdaq trading.

``They're really good evolutionary products and features, but not revolutionary,'' said Chuck Jones, who helps manage $17 billion, including Apple shares, at Atlantic Trust Private Wealth Management in San Francisco. ``It's what people were expecting, but you always hope for more.''

The latest products, key to Apple's efforts to expand into new entertainment and computer markets, might not duplicate the success of the iPhone. That device, unveiled at last year's Macworld show, has sold more than 4 million units, catapulting Apple into the mobile-phone market.

The $1,799 MacBook Air is the ``world's thinnest notebook,'' Jobs, 52, said at the conference in San Francisco. The machine, which has an aluminum shell and glossy 13.3-inch screen, is about three-quarters of an inch thick (1.9 centimeters) and weighs 3 pounds.

Apple fell $9.74 to $169.04 today in Nasdaq Stock Market trading. The shares more than doubled last year after sales of Mac personal computers, iPhones and iPod media players pushed annual profit above $3 billion for the first time.

New Intel Chip

The MacBook Air has a full-sized, back-lit keyboard and an 80-gigabyte hard drive. Intel Corp. redesigned its Core 2 Duo chip, making it 60 percent smaller, to fit into the chassis, Jobs said. Apple will begin shipping the computer in two weeks.

Jobs may sell 2 million to 3 million units of the new notebook this year, making it one of Apple's most popular laptops, Piper Jaffray & Co. analyst Gene Munster said today in a report. He's one of 24 analysts tracked by Bloomberg who recommend buying Apple shares.

``They have a new hit on their hands,'' said Jim Grossman, who helps manage more than 1 million Apple shares at Thrivent Asset Management in Appleton, Wisconsin. ``You have to pay for that thinness, but I don't think anything out there is anywhere near as cool as this notebook is. People who aren't even Mac fans will drool over it.''

Apple already sells two other Mac notebooks: the MacBook for $1,099 and the more powerful MacBook Pro, which starts at $1,999. Mac computers account for half of Apple's sales.

Video Rentals

Apple also plans to offer video rentals through its iTunes online store, expanding the company's role as an entertainment distributor.

The rental service, which debuts in the U.S. at the end of February, will have more than 1,000 movies from ``all major studios,'' including Walt Disney Co. and new partners such as 20th Century Fox, Warner Bros., Sony Pictures Entertainment and Metro-Goldwyn-Mayer, Jobs said.

Movies can be rented from the service 30 days after they're released on DVD. New releases will cost $3.99, with older movies priced at $2.99. High-definition movies cost an extra dollar.

The rental service will be available internationally later this year, Jobs said.

Apple is using the movie-rental business to promote its other products, rather than counting on it as a big source of profit, said Philip Schiller, Apple's senior vice president of product marketing.

Breaking Even

The iTunes store runs at about the break-even point, Schiller said in an interview. The service fuels ``sales of our computers, and our iPods and our iPhones, Apple TV and all of the devices,'' he said.

Blockbuster Inc., the biggest U.S. movie rental chain, and Netflix Inc., which rents out DVDs by mail order, fell on the news. Dallas-based Blockbuster dropped 17 percent to $2.69, the most since August 2004, in New York Stock Exchange composite trading. Netflix, based in Lost Gatos, California, declined 3.2 percent on the Nasdaq.

SanDisk Corp., the world's largest maker of flash-memory cards, also fell in Nasdaq trading. Apple announced that the MacBook Air uses a hard drive, quashing speculation that Jobs might put flash memory into the notebook. The stock dropped $1.40 to $29.08.

Disappointing Sales

Apple's online store, which already lets users buy videos, has delivered 125 million TV shows and 7 million movies, Jobs said. Movie sales haven't met expectations, prompting the decision to launch the rental service, Jobs said.

Apple TV, a device that lets computer users watch videos on widescreen TVs, has been a ``miss,'' Jobs said. He announced new software that updates the device so it no longer requires a computer and lets TV viewers rent movies directly from iTunes. He also cut the price, to $229 from $299.

The company didn't realize at first that ``it's all about movies, movies, movies,'' Jobs said. ``It's an improvement. Certainly we've made some progress since our first try.''

The company also announced it has sold 4 million iPhones since that product's debut in June, exceeding some analysts' estimates.

Expanding Overseas

Apple sold almost 1.4 million iPhones in its first three months. The company began selling the product in the U.K., Germany and France in November, and has said it will offer the device to customers in Asia this year.

Jobs has said he expects to sell 10 million iPhones this year, capturing 1 percent of the mobile-phone market. In the U.S., Apple accounts for 20 percent of so-called smart-phone sales, Jobs said today.

Apple was expected to sell at least 2 million iPhones over the holidays, according to analysts at Piper Jaffray, Sanford C. Bernstein & Co. and Bear Stearns & Co.

After discontinuing the 4-gigabyte model of the iPhone in September, Jobs cut the price of the 8-gigabyte version to $399 from $599 in a move to spur sales.

Jobs also announced a software update to the iPhone that lets users send text messages to more than one person at the same time and find their location using a redesigned maps program.

``The iPhone is not standing still,'' Jobs said.

To contact the reporter on this story: Connie Guglielmo in San Francisco at cguglielmo1@bloomberg.net

Last Updated: January 15, 2008 21:10 EST