Summary:

Apple (NSDQ: AAPL) is making a big play for living room entertainment. Steve Jobs used Macworld to unveil a new iTunes Movie Rentals additi…

image Apple (NSDQ: AAPL) is making a big play for living room entertainment. Steve Jobs used Macworld to unveil a new iTunes Movie Rentals addition to iTunes Store and an update to Apple TV that will let customers rent the movies and more directly on the box without needing a computer. I was at the BBC in London for a satellite screening from San Francisco. The movie rental store includes titles from six major studios plus five others. Titles (some 1,000 of them by end of February) will come 30 days after their DVD release. It’s $2.99 for library movies, $3.99 for “new” releases, available in the US today, elsewhere “later this year.”

Sure, customers may be able to transfer the movies out of iTunes to other devices, and start watching before the download finishes. But the potential game changer here is the Apple TV update – a complete interface overhaul that puts movie rentals front-and-center and offers titles in HD and Dolby 5.1 Surround direct to their lounge. Jobs continually referred to the “widescreen TV” experience – and, if it can get Apple TV right this time, Apple could now become a real player in the PPV VOD market for movies. The video has been posted here.

More detail in my keynote liveblog, after the jump, and more on iPhone at mocoNews… Also, the keynote video is here (requires quicktime).

Jobs virtually admitted the box he recently called a “hobby” had been a failure, and said electronics makers had so far failed to solve the living room web TV equation: “We’ve all missed. We tried with Apple TV. Apple TV was designed to be an accessory for iTunes and your computer … that’s not what people wanted. We learned what people wanted was about movies movies movies. So we’re back with Apple TV take-two.”

Other announcements: iTunes Store has sold four billion songs – 20 million on Christmas Day alone. It’s sold 125 million TV shows and seven million movies via the store, too. iPhone sales have reached four million in its first 200 days.

I am, in a sense, sitting in the front row of the press section at Macworld, waiting for Steve Jobs’ much-anticipated keynote. But I’m not at San Francisco’s Moscone Center – I’m at BBC Television Centre in London, where Apple has assembled some 500 British journalists and others to watch proceedings via satellite feed (see video).

The product rumors: an ultra-thin MacBook, a 3G iPhone, a higher-capacity iPhone, Blu-Ray compatibility and a movie rentals addition to iTunes Store. We shall see…

International: Pascal Cagni, Apple’s GM and VP for Europe, Middle East and Africa, gets up here in London to offer a summary of the company’s recent product announcements, culminating in standardized iTunes Store prices across Europe and the new Mac Pro. The online store will be made available to many more countries in ’08, Cagni says. Apple grew its EMEA premium reseller stores from 273 in 2006 to 364 last year and is now targeting 516 in 2008: “The job (in stores), after the success of the iPod, is to move from iPod only to iPod-and-Mac.”

- Tease: “There’s something in the air,” is the slogan for this Macworld – and Cagni says we’ll get to play with it (whatever it is) in another room, following Jobs’ speech.

- Jobs cometh: Steve takes the stage, lauding Apple’s “extraordinary 2007″. Four main things coming…

- 1. Leopard: Five million copies of Leopard shipped in three months – that’s 19 percent of all OS X users. Jobs slipped up when he referred to the Time Machine facility of “Tiger” (should’ve been “Leopard”) – but he announced “Time Capsule”, a hardware release that combines an Airport Extreme WiFi base station and 500Gb hard disc ($299) or a 1 terabyte ($499) one, with the aim of wireless backup. Out in February.

- 2. iPhone: “We have sold four million iPhones to date.” It’s been in retail for 200 days – that’s 20,000 every day on average, Jobs says. He cites Gartner figures on US smartphone: RIM (NSDQ: RIMM) (39%), iPhone (19.5^), Palm (NSDQ: PALM), Motorola (NYSE: MOT), Nokia (NYSE: NOK), other. “iPhone in its first 90 days of shipping garnered almost a 20 percent market share of the US smartphone market. December quarter – “we think we’re going to have even better.” New features: Maps with auto-location; webclips; nine customized home screens; multiple-recipient SMS; chapter navigation and multiple languages for videos.

- iTunes: The store sold its four-billionth song at the turn of the year. On Christmas Day alone, it sold a record 20 million tracks. And Apple has to date shifted 125 million TV shows and seven million movies this way. “That’s more than everyone else put together but it did not meet our expectations. We’ve looked at this a lot – we think there’s a better way to deliver movie content through iTunes…”

- 3. Movie rentals: Jobs announces iTunes Movie Rentals, an update to iTunes Store. “People don’t want to rent their music … but your favorite movies … most of us watch movies once, maybe a few times – renting is a great way to do it – it’s less expensive, it doesn’t take up space on our hard drives once they’re done.” Over 1,000 releases will be online by end of February, from all the majors (Warner Bros, 20th Century Fox, Walt Disney (NYSE: DIS), Universal, Paramount, Sony (NYSE: SNE) Pictures) plus Touchstone, Miramax, MGM, Lionsgate and New Line Cinema. $2.99 for library titles, $3.99 for new releases. Available in the US from today, internationally “later this year”.

Titles will go online 30 days after DVD release, can be watched on any device and moved from iTunes to any device. Limits: after downloading, you have 30 days to start watching, then 24 hours to finish, during which the movie can be watched any number of times. “You can transfer films to another device in the middle of watching it” and, on a broadband connection, you can start watching movies just seconds after clicking the download button. But what about watching movies on a big screen… ?

- Apple TV “take two”: Jobs suggests all industry players have failed to take the internet video experience in to the lounge. “We’ve all missed – no-one has succeeded yet. We tried with Apple TV. Apple TV was designed to be an accessory for iTunes and your computer … that’s not what people wanted. We learned what people wanted was about movies movies movies. So we’re back with Apple TV take two…”

A new iteration of the box’s software means it doesn’t need a computer, plugs right in to a TV, has a completely reworked interface centered on movie rentals and lets viewers “rent movies directly on your widescreen TV”. Movies are available in HD and with Dolby 5.1 Surround Sound. Library titles and new releases in HD are $1 more expensive than from the regular iTunes Movie Rentals.

Subscribing to podcasts and vidcasts is now easier, and the box’s photo channel fetches photos from both Flickr and Mac, as well as “over 50 million” YouTube videos. Needless to say, TV shows (over 600 of them) and music videos can still be downloaded here. Despite an otherwise impressive demonstration of where home media is going, the Flickr presentation on the Apple TV ends up failing (someone’s going to get a Jobs roasting today).

“I think it’s a revolution, and certainly we’ve made some progress since our first try.” The new Apple TV is a free software upgrade for existing users. The new box drops in price from $299 to $229, starting in two weeks. The whole focus is about widescreen TVs.

- 20th Century Fox: CEO and president Jim Gianopolus gets on stage “to give a little of the back-story” focused on business models. “When Steve came to us with this, it was just a no-brainer.” “VOD is nothing new… but… Apple does things in a very intuitive, insightful, innovative (way)… I think this will be a transformative version of the rental model and we’re incredibly excited about it.” Gianopolus reckons DVD will stick around (and Blu-Ray will win over HD-DVD)… his new Family Guy DVD release can be easily copied to other devices, he says.

- 4. MacBook Air: As rumored, an addition to the MacBook and MacBook Pro machines, the MacBook Air – or, “the world’s thinnest notebook” – is much thinner than the thinnest Sony notebooks Jobs refers to… 3lbs and a tapered 0.16 to 0.76 inches. “We’re talkin’ thin here.” So thin, he produces it from an envelope (see video). It packs a 13.3″ LED backlit display, built-in iSight camera, full-size keyboard with ambient backlighting, lots of multi-touch gesture features inherited from the iPhone experience (see video, pics). “How did we fit a Mac in here?” Configurations – 2Gb memory, 80Gb HD or a new 64Gb solid-state disc, Intel (NSDQ: INTC) Core 2 Duo chip at 1.6GHz standard or a 1.8GHz option, Bluetooth 2.1, 802.11n WiFi. Intel built a 60-percent smaller chip for the machine. No optical drive, but an optional external SuperDrive for $99. “The MacBook Air was built to be a wireless machine,” but a new Remote Disc feature lets users ask nearby users (including Windows users) for permission to borrow their hard disc wirelessly. Costs $1,799, ships in two weeks time, pre-orders being taken from today.

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