Apple today introduced a dramatically smaller and less expensive Apple TV that streams rented movies and TV programs to high-definition television sets, making good on rumors that the company would push what CEO Steve Jobs has long called a "hobby" part of the business.
Jobs also laid out a completely revamped iPod music player lineup, talked up a pair of upgrades to its iOS mobile operating system and touted changes to the company's iTunes music software and store that add some social networking-like features.
The new Apple TV will sell for $99, a major drop from the original model's $229; occupy a footprint one-fourth as large; and lack any storage or synchronization capabilities, said Jobs. The new device, which will hit retail in about four weeks -- customers can pre-order it starting today -- can connect to a wireless network or though Ethernet to draw content from the cloud.
"This is quite a bit different from what other companies think," said Jobs, referring to rivals ranging from television manufacturers to Google, all of which want a piece of the new living room. "There are no more purchases."
Apple will drop content purchasing for an all-rental model that streams content to the hardware, which also let the company dump the older model's hard drive. "People won't want to manage storage," said Jobs. "And they don't want to sync to their computer..., it's too complicated."
Instead, users will be able to rent first-run high-definition movies for $4.99 and some television programs from the ABC and Fox networks for 99 cents.
Jobs hinted that Apple's discussions with other networks had failed to strike a deal. "Not all of them wanted to take the step [into rentals] with us," he said. "[But] we think the rest will see the light."
Consumers who subscribe to Netflix will also be able to stream the all-you-can-eat movies and television programming the DVD delivery service offers to the new Apple TV.
But analysts today called the revamped Apple TV everything from "lame" to "still a hobby."
"I thought it was fairly lame until they got to two things," said Ezra Gottheil, an analyst with Technology Business Research. "First, the $99 price point, and second, the fact that you can push content from an iPad to your TV."
The latter will rely on AirPlay, a new name for Apple's WiFi-based AirTunes streaming technology. Slated for debut in November when Apple releases iOS 4.2 for the iPhone , iPad and iPod Touch, AirPlay will let those device's users stream content -- such as pages from an iPad's browser -- to the Apple TV, and thus to the TV screen.
Ross Rubin, an analyst with the NPD Group, also highlighted the Apple TV's sub-$100 price, but said the new device doesn't make Apple an automatic winner of the battle for the living room. "It's still a hobby," he said, using Jobs' own past description for Apple TV.
Today, Jobs again acknowledged that Apple TV had "never been a huge hit."
"I think it will remain that way for the foreseeable future," said Rubin. "Apple's looking to lower the barriers [to integrating the technology with TVs] but this doesn't mean a massive rewriting of the game."
Earlier in his hour-plus time on stage, Jobs stepped through a refresh of Apple's iconic iPod digital music players. "This is the biggest change in the iPod lineup ever," he said.
An now smaller iPod Shuffle will sell for $49, $10 less than the previous model; the iPod Nano has been shrunk 46% but sells for the same $149-$179 range; and the iPod Touch has been slimmed down.
The top-selling Touch also got a variety of new features, most of them the basis for rumors leading up to today's event.
As expected, the new iPod Touch took its cue from the iPhone 4. It sports a front-facing camera that can be used for video conferencing via Apple's FaceTime application, boasts the same 960-by-640-pixel Retina display, and is powered by Apple's own A4 SOC (system on a chip), which runs not only the iPhone 4 but also the iPad.
The price for the least expensive 8GB iPod Touch jumped from $199 to $229, a 15% increase, but the 32GB and 64GB models retained their previous $299 and $399 price points.
"These are significant changes to the three lines of iPods," stressed Rubin. "The camera they added to the iPod Touch has a lot of potential to expand the market for video conferencing."
The new iPod Touches will be able to conduct video-based conversations using WiFi with iPhone 4s as well as with other new Touches, Jobs said.
For Gottheil, the iPod revisions were secondary to the new iTunes 10, which is slated to be available for download today. "Music-based social networking could be explosive," he argued, referring to the new iTunes-based network dubbed "Ping" that lets users "follow" both artists and friends.
Jobs called Ping "social music discovery," and spent substantial time demonstrating how artists can use it to promote their material, and how friends can discuss the music they enjoy.
"You can follow people and you can be followed," Jobs said. "Most artists will hold their hand up and say 'you can follow me;' you can hold your hand up and say that as well, or you can say 'people can follow me but I have to approve who follows me.'"
"This is one of those 'why hasn't someone thought of this before' things," said Gottheil. "It has the potential to be a killer [application] in social networking, since there's a lot more to talk about when you're listening to the same music than there is when you're reporting what you had for breakfast."
Jobs also announced that iPhone and iPod Touch owners will receive the iOS 4.1 upgrade next week, and the follow-up iOS 4.2 -- which will also be the long-expected operating system update for the iPad -- in November.
iOS 4.1 will fix several prominent bugs, including ones involving the iPhone's proximity sensor, Bluetooth connections and a slow-down reported by iPhone 3G owners who upgrades to iOS 4 this summer. The upgrade also marks the debut of Game Center, Apple's multi-player online gaming network, which was first announced in June.
The new iPods will ship in a week, according to Apple's online store, while the re-crafted Apple TV is slated to ship later this month.