Updated from 3:56 p.m. EDT

SAN FRANCISCO -- Apple Computer ( AAPL) is finally heading into the living room -- or at least it aims to by the beginning of the year.

Beginning in January, Apple plans to offer a new device, code-named iTV, that will allow users to easily watch and listen to digital media -- movies, songs, photos -- on their home entertainment systems.

Although the company has clearly been moving in that direction for a while, the new device marks the first time Apple will offer a product specifically targeted at the so-called digital living room.

"We hope this gives you a little bit of an idea of where we're going to," company CEO Steve Jobs said at a media event here Tuesday. "We think it completes the picture."

The iTV device was the only real surprise at the event, and it wasn't enough to thrill investors. Instead, Apple's stock closed regular trading up just 13 cents, or about 0.2%, to $72.63.

The rest of the event was filled with announcements that were either expected or relatively modest, or both.

For instance, confirming rumors that have been bubbling for months, Jobs announced that Apple will start selling movie downloads. But the company is launching the service with the support of just one of the major studios, Walt Disney ( DIS), on whose board Jobs sits.

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