Apple Sets Out for New Frontier: Video

Updated from 3:33 p.m. EDT

SAN JOSE, Calif. -- Already dominating the digital music market, Apple ( AAPL) hopes to broaden its reach into video -- and the living room.

CEO Steve Jobs on Wednesday announced three updated products, all with the video theme, including, as expected, a pair of new iPod models that will play movies and music videos. But Jobs didn't stop there, introducing an updated version of Apple's iMac desktop computer that enables owners to launch and play digital videos, DVDs and music using a remote control.

And he announced a new version of the company's iTunes music store that will allow customers to purchase videos, including first-run television programs, including the hit ABC series Desperate Housewives, and short films from the Jobs-headed Pixar ( PIXR).

The announcements mean that Apple will "have some really hot products" this holiday season, Jobs said. But they also represent something bigger, he said, emphasizing the company's move to allow the online purchase of video, and allow its playback on both computers and portable devices.

"I've got a feeling we're not in Kansas anymore," he said.

The effort represents Apple's first overt attempt to create a place for itself in the living room, and to counter such products as computers that run Microsoft's ( MSFT) Media Center PC software as well as upcoming video-game consoles from both Microsoft and Sony ( SNE) that those companies intend as much more than game-playing devices.

Prior to Wednesday's announcement, Van Baker, an analyst with Gartner, was skeptical that Apple would launch a video iPod because of the lack of potential movie content. But following the presentation, Baker said he was impressed by the content that Apple lined up, particularly the deal with Disney.

Although the amount of content that Apple has in iTunes won't be enough long-term, Baker says it's a good start and predicted that other media companies soon will be calling Apple to strike their own deals.

Baker also was impressed with the new remote-control software. Baker envisions Apple possibly putitng the same software, called Front Row, on other models and incorporating a TV tuner on those computers for a full multimedia experience.

Contrasting Front Row with Microsoft's rival offering, Baker said "Front Row is Media Center PC done right. It's simple."

Apple representatives declined to say whether Front Row would be made available for other Apple computers. The new remote control will work with both the iMac and iPod accessories, but Apple wouldn't say if it would work with other Apple computers.

The move also represents an effort by Apple to get ahead of Sony and other rivals that have begun to incorporate video playback into their handheld music players and game machines.

Rumors had been flying in recent weeks that Apple would introduce a new video-playing version of its iPod, and Jobs didn't disappoint. The company is replacing top-of-the-line 20-gigabyte and 60-GB iPod models with new 30-GB and 60-GB versions that are thinner, have larger screens and will play videos.

The company is offering the products, which will start shipping next week, at the same prices -- about $300 and $400, respectively -- as their predecessors.

Jobs' onslaught continued. He announced a new version of iTunes in which video is a central new feature. Customers will be able to purchase some 2,000 music videos, episodes of five different Disney ( DIS)-owned television shows and six Pixar short films for $1.99 each. The television shows include Lost and Desperate Housewives and some lesser-known fare.

Disney CEO Robert Iger, who was on hand for the announcement, said the TV shows that Disney is offering is just the start. He sees the company offering more content online, not only through iTunes but through other services as well. However, he declined to say if or when Disney might offer its vast library of movies.

"A lot depends on the consumer," he said, but "this is just the beginning," declining to refer to the pact with Apple as an experiment.

Apple did not give any financial details about the Disney deal.

The plethora of product announcements couldn't offset investors' continued disappointment in Apple's earnings report announced late Tuesday. The stock was recently off more than 5% to $48.81 -- a 10-week low.

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