Apple's Head Start

At least in the U.S., Apple's iPod music players and iTunes music store dominate the digital music market. The company has sold more than 850 million songs through iTunes and says it's on pace to sell more than a billion this year. As song downloading replaces CDs, many analysts believe it's only natural that consumers will increasingly want to listen to digital music in their living rooms -- and that Apple will help accommodate them.

Last fall, Apple began offering video downloads through iTunes, in addition to songs. The service launched with episodes of "Lost" and "Desperate Housewives" from Disney's (DIS Quote) ABC and has since added episodes of television shows aired by a number of different NBC-related networks as well. Those deals marked the first time that an online video provider was offering content from major Hollywood studios. And the service seems to be taking off; since launching the video downloads in October, Apple has already sold 8 million of them.

The videos are low-resolution, designed for short download times and to be viewed on Apple's video-playing iPods. But some analysts believe it's only a matter of time before Apple begins offering higher-resolution versions made for television-sized displays.

The company is shipping remote controls and its Front Row software with its most recently updated Macintosh computers. The software and remote promise to give users a living room-like experience through their computers, allowing easy access to digital music and movie files without having to sit right in front of the keyboard.

Apple already provides some connections between the living room and its computers. Its AirPort Express wireless access point allows users to play iTunes-purchased songs over their home stereo systems via a wireless network. The company and some of its partners also offer cables and docking stations that allow users to connect their iPods to their entertainment centers to play music or display photos on their TVs.

Through its iLife creative suite, Apple has made a name for itself in recent years in providing tools for everyday computer users to create and edit digital content. Again, some analysts believe it's not a huge leap between giving users the tools to create digital movies or play digital songs and helping them to enjoy them in their living rooms.

"It currently offers a piece of the whole digital living room play," says Tim Deal, an analyst with Technology Business Research. The key thing missing from Apple's current offerings is a direct way to view and record live television, notes Deal.

"If it were equipped with these functions," the company's iMac desktop computer, which already includes the remote control and Front Row software, "would be an excellent flagship home convergence device for Apple," he says.

Deal believes the company will head in that direction, if only because its competitors are already there -- or soon will be. Microsoft (MSFT Quote), for instance, is trying to enter the living room with its video- and music-playing Xbox 360 game console and with the Media Center PC, the multimedia-enhanced version of its Windows operating system. Dell (DELL Quote), Hewlett-Packard (HPQ Quote) and other computer and electronics manufacturers are making their own versions of Media Center PC boxes. Sony (SNE Quote) is attacking the living room with its video-playing PlayStation Portable handheld game system and its upcoming PlayStation 3 game console, which will play digital movies and music.

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