Apple Computer this week announced it will begin selling movie downloads from Walt Disney's film studios, aiming to turn its iTunes online music store into a one-stop shop for digital entertainment.
Chief executive Steve Jobs said Apple planned to ship a device in the first quarter of 2007 to let consumers stream movies, music, photos, podcasts and television shows from the internet to their home entertainment systems.
Code-named iTV, the device will cost $299 (€235) and analysts said it could solve the entertainment industry's dilemma of bridging the gap between the television and the computer.
"He has fundamentally closed the loop and Apple has a complete solution," said Tim Bajarin, an analyst at Creative Strategies, of Jobs. "This is a big winner for Apple."
Jobs said the combination of iTV, its Macintosh computer, the iPod and other Apple products will put Apple squarely in homes, cars and consumer pockets as it looks to stamp its mark on the digital lifestyle.
"I hope this gives you a little bit of an idea of where we are going," Jobs said at an event in San Francisco, where he also unveiled new versions of the popular iPod media player.
Jobs said the transformation of the analogue to digital photographs is "far along", and is progressing in music. He said Apple is now the fifth-largest reseller of music in the United States behind Wal-Mart, Best Buy, Target and Amazon.com.
As for movie downloads and tying together the Mac computer and the living room, Jobs said he was confident Apple would succeed. Microsoft and Intel have pushed media PCs for years, but with little broad-based success.
"Everyone who's tried this before has failed," Jobs said. "We have a pretty different approach and I think we'll be successful with it."
He also suggested more studios would be announcing tie-ups with Cupertino, California-based Apple.
Bajarin said: "Any of the other studios would be crazy not to jump on this."
Apple's eagerly anticipated movie service will sell new releases from the Disney, Pixar, Touchstone and Miramax studios for $12.99 if pre-ordered or bought during the first week available.
Normally, new releases will cost $14.99 and other feature-length films will cost $9.99.
Jobs said that about 75 films are now available on iTunes, and that they take about 30 minutes each to download for users with high-speed internet connections. Consumers can view the movies on their iPods and computers, and eventually on televisions with the upcoming iTV player.
"In less than one year, we've grown from offering just five TV shows to offering over 220 TV shows, and we hope to do the same with movies," Jobs said.
"iTunes is selling over 1 million videos a week, and we hope to match that with movies in less than a year." Jobs, a Disney director and one of the company's largest individual shareholders, also introduced new versions of the iPod with brighter screens and longer battery life as Apple looks to expand its dominant position in digital music.
Analysts have said it was only a matter of time before Apple started selling full-length movie downloads via iTunes, which has already sold 1.5 billion songs and more than 45 million TV shows.
Apple's push into movie downloads comes when the company is facing a growing contingent of competitors in the digital music market, including Microsoft, which plans to launch its Zune digital media player this year.
There are already competitors in the nascent movie download market, including CinemaNow, Movielink and Amazon.
In a note to clients, Goldman Sachs analyst David Bailey said that iTV highlights Apple's "ability to consistently lead the industry and create new markets - all of which should contribute to earnings upside over the next year." Apple shares ended up 13 cents at $72.63 on Nasdaq.
