From: Reuters
Published January 15, 2008 08:06 PM

Apple unveils super-thin "Air" laptop, Web movies

By Scott Hillis

SAN FRANCISCO (Reuters) - Apple <AAPL.O> on Tuesday launched an aluminum-clad laptop just three-quarters of an inch thick, seeking to bring a new computer to market with the same cachet as its iPod and iPhone devices.

Apple also said it would let people rent films over the Web with upgrades to its iTunes online media store, a technological challenge to a movie industry still largely focused on DVDs.

Shares of movie rental firms Netflix and Blockbuster fell sharply in response, and Apple's own stock lost 5.5 percent since the announcements were widely expected and Chief Executive Steve Jobs failed to conjure up any big surprises.

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Jobs set a high bar last year by unveiling the iPhone. In addition, many times he ends presentations with by saying, "One more thing..." as a prelude to something unexpected. This year there was none.

Still, Jobs' talents as a showman were on display when he took the stage at the annual Macworld convention in San Francisco to cheers and applause from a few thousand software developers, customers and Apple employees.

He detailed a series of new products and services but saved the laptop, dubbed the MacBook Air, for last, drawing it out of a standard manila envelope to emphasize its slim dimensions.

Jobs said the new notebook was the thinnest available, measuring 0.76 inches at its thickest point and tapering to just 0.16 inches.

Priced from $1,800, the Air bridges the gap between Apple's entry-level and high-end laptops, but analysts voiced concern that it could steal customers away from pricier products.

"It's not really clear how many more incremental buyers you can drive, and there could be some cannibalization," said Shaw Wu, an analyst with American Technology Research.

MacBook laptops have been one of the company's strongest products, with sales rising 37 percent on the year in the fiscal fourth quarter ended last September.

NEW APPLE USERS SOUGHT

Phil Schiller, Apple's vice president of marketing, said the new laptop could appeal to a large swath of customers, including business travelers, those in education and people who wanted a more attractive computer at home.

"The goal overall is to continue to grow the business, so having another product in the line helps to do that. If the mix (of customers) changes a little bit, it doesn't matter as long as we grow everything," Schiller said.

Apple stock has nearly doubled since last year's Macworld, and in late December topped $200 for the first time, driven by market-share gains by Mac computers, continued iPod strength, and enthusiasm over the iPhone, which Jobs said had sold more than 4 million units since its release last June.

Jobs showed off new iPhone features such as displaying a user's location on a map and a way to customize the main screen with icons linking directly to specific parts of a Web site.

"The iPhone is not standing still. We keep making it better and better and better," Jobs said.

But the company has struggled to find a big audience for Apple TV, a product originally designed as a Mac accessory for watching Internet video on a television and unveiled alongside the iPhone a year ago.

"It's not what people wanted. We learned what people wanted was ... movies, movies, movies," Jobs said.

A new version of Apple TV will be able to connect to the Internet directly and download TV shows, movies and music through iTunes. Viewers will be able to choose movies directly from their TVs and Apple said viewers could start watching within seconds if they had a fast Internet connection.

Jobs announced deals with all six major movie studios and several smaller ones to offer movies for rental through iTunes, with new releases costing $3.99 and library titles $2.99. High-definition movies will also be available.

The revamp of Apple TV hardware combined with a broad selection of movies would give Apple an edge over competitors such as Amazon.com Inc <AMZN.O>, Netflix and Microsoft Corp <MSFT.O>, American Technology Research's Wu said.

News Corp's <NWSa.N> 20th Century Fox, Walt Disney Co <DIS.N>, Time Warner Inc's <TWX.N> Warner Bros, Viacom Inc's <VIAb.N> Paramount, General Electric Co's <GE.N> Universal, Sony Corp's <6758.T> Sony Pictures, Lionsgate <LGF.N>, MGM and New Line have all signed on to Web rentals, Apple said.

"It's too early to declare that this is going to be a big hit but this is arguably the best offering out there right now," Wu said.

Apple shares fell to $169.04, while mail rental firm Netflix Inc <NFLX.O> shed 3.2 percent, and top video rental chain Blockbuster Inc <BBI.N> dropped nearly 17 percent.

(For more tech news see the Reuters Mediafile blog at http://blogs.reuters.com/mediafile)

(Additional reporting by Duncan Martell in San Francisco, Sinead Carew and Kristina Cooke in New York; Editing by Toni Reinhold and Braden Reddall)

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