And also:

An Apple TV With a Blu-ray Player?

By Saul Hansell

Tags: Apple, macworld, video

Rumors are flying fast and furious over what Steve Jobs will pull out of his
blue-jean pocket a week from Tuesday at his annual speech at the Macworld
Expo in San Francisco. These include a movie rental service for iTunes, a
super small notebook computer perhaps with a solid-state hard drive, a
notebook docking station, and new features for the iPhone. Shaw Wu, an
analyst with American Technology Research, suggested that Apple will start
shipping some computers with Blu-ray high-definition DVD drives.

By itself, adding Blu-ray to Macs is nothing more than continuing to add
features to justify the Mac price premium. But there is another move that
Apple could make that could well be a game changer: introducing a new
version of Apple TV with a built in Blu-ray player.

Separately, neither Apple TV nor Blu-ray players have excited consumers.
People have been wary of the fight between Blu-ray and rival HD DVD players,
worrying that they will end up owning the disk equivalent of a useless
Betamax player. And Apple TV just didn't seem to have all that many useful
things you could do with it.

For that matter, online video rentals have been around for several years, by
way of Movielink, and also have attracted very few users. The hottest movie
download service in fact may be Xbox Live, which makes sense because the
game machines are already hooked up to televisions.

Imagine, however, if Apple introduced this product, say for $399: It plays
Blu-ray disks. It lets you buy or rent movies and TV programs from the
Internet. It automatically downloads and plays free video (and audio)
podcasts. And it brings your iTunes music collection to your living room.

This combination of features may be enough of a package that consumers will
feel they aren't taking too much risk buying one. And Apple's brand may also
reassure them. The company is not only the sexiest name in consumer
electronics right now, but it also has a respectable track record of being
able to negotiate with Hollywood to bring content to its devices. (The first
version of Apple TV was a bit of an exception).

Apple's clout might also help tip the now-tied race between Blu-ray and HD
DVD. (Apple has been on the sidelines, but is a Blu-ray sympathizer. It
serves on the Blu-ray advisory committee. And Disney, of which Mr. Jobs is
the largest shareholder, backs Blu-ray.)

There are two other features of this product I'm imagining I'd like to see,
but I think are less likely: streaming video and a commitment to
advertiser-supported free video. Apple has focused on video downloads, in
part because the quality is better than streaming and they fit into its
iTunes model. But the first Apple TV does have streaming for movie trailers.
Adding a broader streaming capability would expand programming choices and
make the device useful for live and very recent content, like news and
sports.

Apple has also not been serious about exploring ad-supported video, but this
too is inevitable. For everyone who wants to watch "Heroes" without
commercials for $1.99 an episode, there have to be 10 or 100 who will put up
with commercials to see it free.

Such a device could also have a TV tuner, a CableCard slot and act as a
digital video recorder. But my guess is that Mr. Jobs would find that this
makes it far too complex and he will leave these functions to the cable set
top boxes.

I don't know what Mr. Jobs will pull out of his pocket. But I do know that
he has a three-decade track record of picking when a technology is ready to
enter the mainstream. Blu-ray and Internet video combined may be at just
such a moment.

Dave Crozier





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