Apple Unveiling Movie-Playing iPod?

Sept. 1, 2006 — -- Blogs and Apple fans are buzzing over a report that Apple is preparing to announce its iTunes music store will begin offering movie downloads.

The report, which appeared in Business Week, also claimed a new iPod with a larger screen to accommodate films will be announced at the same event, which the article claimed will be Sept. 12.

"We are expecting to see a new player from Apple -- we've been waiting for one since the last quarter," said Rob Enderle, principle analyst with the Enderle Group. "They need a player that really embraces video."

According to the report, Apple will charge from $9.99 for older films, to $14.99 for new releases.

Fans and technophiles have been eager to get a look at what Apple has in store for the company's first iPod built for movie playback -- but the experts have some idea of what we'll likely see later this month.

Bolder, Bigger and Better

The iTunes music store has sold over one billion songs through the service and has successfully offered downloads of TV shows since last year. That success is due in no small part to the iPod's ubiquity and ease of use.

But in order to play movies, the player will require a Beverly-Hills-caliber makeover.

"The iPod Nano was optimized for short-form video like TV shows, music videos," said Michael Gartenberg, analyst with Jupiter Research. "You could get that sense based on form factor, screen size, battery life etc. … [A movie iPod] would need a larger viewing screen. And, of course, Apple's challenge is to keep that iPod form factor."

The larger screen is a big deal for the little dynamo. While TV shows and music videos are generally made to be watched on a squarish screen, movies are shot in widescreen and require a more rectangular screen for proper viewing.

If you've heard the term "aspect ratio" tossed around, those screen dimensions are what it refers to. Aspect ratio is the screen's width, divided by its height. A traditional television uses a 4:3 aspect ratio, while high-definition widescreen TVs use a 16:9 aspect ratio.

But the screen is not the only thing that will need to change about the iPod in order to make it ready for Hollywood -- or maybe Bollywood, depending upon where it's sold.

"Battery life is huge for this, because they've [the batteries] suffered badly when the screen stays on," Enderle said. "You're also going to need a much longer battery life if you want to get through a two-hour-plus movie."

Apple Reborn -- Again

While Apple continues to dominate the digital music player and download market with a roughly 70 percent market share, a number or companies including Microsoft already have, or are working on, so-called "iPod killers."

To date no one's even come close to threatening Apple's market share, but it's unlikely the company will rest on its laurels.

"I don't think [Apple CEO] Steve Jobs' approach will be that we're so far ahead, let's give everyone a chance to catch up," joked Gartenberg.

He pointed out that there have been many times over the years when the media and analysts counted the iPod out, presuming its demise was just around the corner.

Of course, they were very wrong.

"About this time a year ago, people were writing stories saying that the iPod had run out of steam," he said. "Then they introduced the Nano, and people were blown away."

Apple, he said, has a gift for reinventing itself and its products.

Don't Fear the Reaper

While fan boys "ooh" and "ahh" over the possible features of a new iPod that hasn't even been announced yet, DVD retailers may be singing a different tune.

Business Week reported that Wal-Mart, the nation's biggest DVD seller, isn't too happy about studios making nice with Apple in order to get their films featured on iTunes.

But Gartenberg argued that there's no need for worry.

"There's no doubt that there's going to be a certain amount of disruption, but it's not going to jeopardize the brick-and-mortar DVD retailers," he said. "Most people are still going to watch movies on their high resolution HD TVs."

While he agreed Apple caused significant disruption to the music industry with iTunes, he attributed that to the offering of single-song downloads, which had no equal in retail stores.

But he didn't think Apple's movie business would be quite as threatening to the film industry.

Experts agree that if successful, the offering of movies for download will certainly cut into DVD sales. But there's enough room for everyone to share a piece of the digital pie.

"Amazon is hugely successful, but Barnes and Noble still thrives, online and in the brick-and-mortar space," said Gartenberg. "It's often not 'this or that' but 'this and that' -- and the other thing too."