Apple Makes ITunes More Social, Adds 99-Cent TV Rentals
Apple Inc. CEO Steve Jobs
David Paul Morris/Bloomberg
Steve Jobs, chief executive officer of Apple Inc., speaks during an Apple product unveiling event in San Francisco.
Steve Jobs, chief executive officer of Apple Inc., speaks during an Apple product unveiling event in San Francisco. Photographer: David Paul Morris/Bloomberg
Sept. 1 (Bloomberg) -- Michael Gartenberg, an analyst with Altimeter Group, talks about Apple Inc.'s revamp of its Apple TV set-top box. He talks with Pimm Fox on Bloomberg Television's "Taking Stock." (Source: Bloomberg)
Sept. 1 (Bloomberg) -- Apple Inc. introduced a new version of its Apple TV set-top box and updated versions of its market-leading iPod media players and iTunes software, including more social-networking features that let users see what their friends are downloading. Bloomberg's Cris Valerio reports. (Source: Bloomberg)
Apple Inc. CEO Steve Jobs
David Paul Morris/Bloomberg
Steve Jobs, chief executive officer of Apple Inc., speaks about new iPods during an Apple product unveiling event in San Francisco.
Steve Jobs, chief executive officer of Apple Inc., speaks about new iPods during an Apple product unveiling event in San Francisco. Photographer: David Paul Morris/Bloomberg
Apple Inc., building on its dominance in the music industry, unveiled new iPod media players, added social-networking features to its iTunes software and introduced a service that lets users rent shows and movies.
The company unveiled a lower-priced Apple TV set-top box that can offer high-definition TV-program rentals for 99 cents, Chief Executive Officer Steve Jobs said today at an event in San Francisco. The $99 device also will deliver first-run movie rentals for $4.99 and work with Netflix Inc.’s online service.
Apple, the largest technology company by market value, is parlaying its leadership in mobile applications and music sales to push deeper into video content and social networking. To offer the TV rental service, it forged deals with Walt Disney Co.’s ABC and News Corp.’s Fox. The updated software and additional content also are part of Jobs’s strategy of getting consumers to buy more devices, including the iPhone and iPad.
“Apple realizes they need to be a bigger player in the living room,” said Gene Munster, an analyst at Piper Jaffray Cos. in Minneapolis, who is raising his projections for Apple TV. “It’s a big enough space that there’s room for them.”
The new iTunes 10 adds a music-focused social network called Ping, which lets users “follow” others, Jobs said. The company also introduced new designs for all its iPods today, including a $49 Shuffle with 15 hours of music play and a smaller iPod Nano with a touch pad. The updated iPod Touch has a sharper screen, a front-facing camera, and features that allow video editing and face-to-face chats.
‘Biggest Change’
“It’s the biggest change in the iPod lineup ever,” Jobs said at the event.
Apple rose $7.23, or 3 percent, to $250.33 at 4 p.m. New York time in Nasdaq Stock Market trading. The shares have gained 19 percent this year, compared with a 3.1 percent drop in the Standard & Poor’s 500 Index.
Apple has sold more than 275 million iPods since the product’s debut in 2001, Jobs said. The device has helped drive the popularity of iTunes, which accounted for 28 percent of all U.S. music purchases and 70 percent of all digital sales in the first quarter, according to NPD Group Inc. in Port Washington, New York.
Outpacing Google?
The Cupertino, California-based company has shipped more than 120 million products that run its iOS operating system, including the iPhone, iPad and iPod Touch, Jobs said. There are now more than 250,000 applications available for the devices.
Jobs said users are activating 230,000 iOS products daily, putting the operating system ahead of the pace of Google Inc.’s Android software. Google CEO Eric Schmidt said in August that Android was gaining 200,000 new users a day, up from 100,000 two months earlier.
Apple also added a Game Center feature to the operating system that offers multiplayer games. Players can challenge friends on their iPads, iPhones and iPod Touches.
For the rental service, Apple didn’t disclose the length of its deals with Fox and Disney. In an e-mailed statement, Jim Gianopulos, head of Fox Filmed Entertainment, said the company is “excited to be working with them over the next several months to explore this innovative offering.”
Apple is also negotiating with the other two biggest U.S. broadcasters, NBC Universal and CBS Corp., people familiar with the talks said last week.
‘Right Direction’
“We’ve seen how successful they’ve been with the iTunes music store,” said Bill Kreher, an analyst for Edward Jones in St. Louis. He recommends buying Apple shares, which he doesn’t own himself. “On the entertainment side, it’s been slower than the ramp-up in music. They continue to move in the right direction.”
Investors may focus more on the effect new services have on the iPhone and iPad, which generate 70 percent of Apple’s operating profit, said Brian Marshall, an analyst at Gleacher & Co. in San Francisco. “This helps that ecosystem,” he said.
Apple TV, which previously cost $229, has moved to a rental-only approach, Jobs said. Users will get 30 days to start watching the programs, and then have to finish within 48 hours.
Jobs expects that to appeal more to consumers. ITunes has been offering purchases of TV shows for download, typically for $1.99.
“There are no purchases on Apple TV anymore,” Jobs said. “You rent everything.”
To contact the reporters on this story: Adam Satariano in San Francisco at asatariano1@bloomberg.net; Rochelle Garner in San Francisco at rgarner4@bloomberg.net
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