Kim Peterson

Top Stocks1/15/2008 3:30 PM ET

The surprise about Apple

The Macworld Conference & Expo used to be filled with announcements that had observers gasping. But the surprises at this year’s event were in the details.

By Kim Peterson

Apple used to be good at keeping secrets. There was a time when Chief Executive Steve Jobs would give a speech and the audience would gasp in surprise.

Turns out there are some leaks aboard the good ship Apple (AAPL, news, msgs). Most of the news today out of the Macworld Expo in San Francisco was pretty much expected. That isn't to say there weren't some gasps from the audience, though. The surprises were in the details.

Yes, Jobs announced an ultrathin notebook computer. But the new model, the $1,800 MacBook Air, is shockingly thin. We're talking 0.16 inch on one side and 0.76 inch on the other. The Air weighs just 3 pounds but has a 13-inch display, a Web camera and a full-size keyboard. The hard drive is pretty decent, at 80 gigabytes, and the processing speed and memory beat what other companies can offer.

What the Air doesn't have is a CD or DVD drive. You don't really need one anymore, Jobs says. I'll explore that later in a blog post.

It was also expected that Apple would debut movie rentals on iTunes, available today, but the surprise is that Jobs won the cooperation of all major movie studios. Even the hardest-nosed studios agreed to a modest price for rentals: $3.99 for a new release and $2.99 for older titles. High-definition movies will cost a dollar more. More than 1,000 titles will be available by the end of February.

Yet it's disappointing that Jobs couldn't get the studios to ease the terms of those rentals. I thought Apple would be enough of a heavyweight that it could effect change in this area. But no. Like other online movie services, you get only 24 hours to watch a rental once you hit the "play" button. And you have 30 days to watch a movie before it disappears from your hard drive. And most outrageously, you have to wait 30 days from when a DVD is released to rent it on iTunes.

Perhaps the biggest news out today is the revamped Apple TV. The digital receiver has been a bust since it was unveiled in March, and Jobs conceded that Apple and other tech companies "all missed" when it came to delivering movies over the Internet to the home television set.

Now, you don't need a computer to get movies and music on Apple TV. Instead, you can rent or buy videos online (including high-def titles) and they'll download directly to the Apple TV set-top box. You can also see photos on Flickr, YouTube videos and podcasts. You can rent movies directly to the box or buy television shows for $1.99 an episode.

Apple TV comes out in two weeks at $229 (it previously sold for $300). Apple is incredibly aggressive in this area and will move fast to steal customers from such rivals as Netflix (NFLX, news, msgs), Amazon (AMZN, news, msgs), Microsoft (MSFT, news, msgs) and Vudu. It's a game-changer. Expect a full-on marketing push in this area in the future. (Microsoft publishes MSN Money).

Apple has sold 4 million iPhones to date -- an average of 20,000 a day since its debut last year -- and snagged a 20% market share in its first quarter of shipments, Jobs said. Today, he announced a software upgrade that will automatically show your location on a map and give you directions. That feature uses some fancy triangulation footwork based on locating Wi-Fi networks and cell-phone towers.

Video on MSN Money

Steve Jobs
Steve Jobs exclusive
Apple Chief Executive Steve Jobs discusses the new MacBook Air, the thinnest laptop in the world, which was unveiled at today's Macworld Expo.

The iPod Touch got new software as well, including new mail, mapping, stocks and weather applications. New units will have the software built in, but existing iPod Touch owners will have to buy the upgrade for $20. That's not going to go over well.

Apple's strength is taking new media and software technologies and placing them directly in the mainstream. Online movie rentals and ultralightweight notebooks have plodded along to date, but Apple's entry will upend the businesses entirely. Get ready for these areas to change quickly.

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