Jobs Appeals to the Crowd

At Macworld, Apple CEO Steve Jobs introduced the ultra-thin Air laptop and big revisions to Apple TV. Fans were pleased, but Wall Street didn't seem so

Apple (AAPL) Chief Executive Officer Steve Jobs, had a message for the Mac faithful who came out in force for this year's Macworld Conference & Expo: I hear your cries. Even the most committed Apple fans had been unimpressed with the company's initial attempt to bring digital video onto the TV screen, Apple TV. And many had hoped for a fuller selection of Mac computers.

Jobs was listening. On Jan. 15 Apple unveiled an ultra-sleek laptop, the "Air," and made a host of upgrades to Apple TV, the set-top box that delivers video to a television. The company also said it has sold 4 million iPhones in its first 200 days on the market.

The announcements were greeted with enthusiasm by the throngs of conference attendees who scrambled for seats in San Francisco's Moscone Center, but initially failed to wow Wall Street. Apple shares declined $11.68, or 6.5%, to $167.10 in early afternoon trading. "There was nothing wrong with what [Jobs] said," says Piper Jaffray & Co. analyst Gene Munster. "It's just that everyone is wanting more. Wall Street doesn't know what any of the products look like, so once the MacBook Air starts working its way through Wall Street, the stock will take another run once people realize it's a game-changer."

A Whole New Range of Gestures

The MacBook Air is the world's thinnest notebook, beating the 0.8-in.-to-1.2-in. thickness of the current generation of very thin laptops. At its thinnest, MacBook Air will be 0.16 in. thick. Even at its fattest (0.76 in.), the Air will fit into an interoffice envelope. The device will boast a full-size keyboard and a 13.3-in. screen.

Air also shows that Apple is taking what it's learned from the touch-sensitive iPhone back to the Mac world. The large trackpad will have multitouch gesture (or movement) support to turn on all types of gestures, such as double-tap to move a window around. In a large photo, you can pan around with two fingers, or rotate. There's even the patented pinch.

"I'm still stunned our engineering team could pull this off," Jobs told the crowd. Apple got an assist in creating the Air from Intel (INTC), maker of the chips that will run the device. "At the end of the day, we did what we do best together, which is innovate," said Intel CEO Paul Otellini, who joined Jobs onstage to introduce the new computer.

Giving Them What They Want

Apple also made key revisions to Apple TV. "We've all missed," Jobs said of early attempts to bring video from the home computer to the living room. "No one has succeeded yet. We tried with Apple TV. Apple TV was designed to be an accessory for iTunes and your computer. It was not what people wanted. We learned what people wanted was movies, movies, movies." To satisfy that need, the Apple TV redux will let users rent directly from the set-top box, no computer required. The selection of YouTube videos also expanded to more than 50 million. The service also will let consumers buy TV shows and music right on Apple TV. HD movies will cost $4.99, with over 100 titles in HD at launch. There will be over 600 TV shows, available for $1.99 per episode.

As expected, Apple also is launching a movie rental service. The surprise is that the service includes every major studio: Touchstone, Miramax, MGM, Lions Gate, New Line, Fox, Warner, Disney, Paramount, Universal, and Sony. "We were expecting two [studios] and it was six," says Munster. "As moving content, the walls are coming down. They are right on the money."

New Features for iPhone

There is a catch, however. The launch will have more than 1,000 films by the end of February, but they won't be available until 30 days after the DVD releases. Films can be watched wherever—on Macs, PCs, iPods, and the iPhone, and renters have 30 days to start watching the movie and then 24 hours to finish. The service launched Jan. 15 with a free software update. It rolls out internationally later in the year. Older titles will be $2.99 and new releases $3.99.

Other announcements included an update to the iPod touch. For a one-time $20 fee, users will get mail, stocks, weather, and maps with Wi-Fi. New iPod touch models will come with the updates for free. New features on the iPhone include maps with location (developed with Google (GOOG)) and the ability to customize the home screen and send short messages to multiple people.

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