Is Apple's News Underwhelming?

The Apple (Nasdaq: AAPL  ) rumor mill has been hard at work lately, with plenty of folks prognosticating about what exactly Steve Jobs would announce today in the company's "It's Showtime" event. I found the actual announcements mostly underwhelming, with some potential bright spots on the horizon.

First off, there's a whole slew of new iPods at new price points, with increased storage capacity. For example, the newest high-end iPod will have 80 gigabytes of memory for $349. New iPod-ready video games like Tetris, Pac-Man, and Bejeweled, available through iTunes, are kind of nice, but certainly nothing earth-shattering. (I already play Tetris on my cell phone all the time, even though it cramps up my hands.)

Additional storage space goes without saying, given consumers' increasing interest in downloadable video. And while Apple did make good on digital movie downloads, it hasn't gone the whole nine yards. Its first offerings are only from Disney (NYSE: DIS  ) and subsidiaries Pixar, Touchstone, and Miramax -- a no-brainer considering Jobs' Disney connection. The iTunes offerings also address one of the major hurdles in digital film downloading: price. New releases will sell for $12.99 when preordered or purchased in the week following the release of the digital and DVD versions, and $14.99 thereafter. (Older titles will sell for $9.99.) Those prices seem more reasonable than the fees charged by other nascent digital movie offerings like CinemaNow and Movielink, which struck me as far too expensive to get consumers terribly interested.

However, it's disappointing that more movie studios aren't involved yet. Although more studios will likely join -- Lions Gate (NYSE: LGF  ) recently spilled the beans on pending distribution through iTunes -- it's well-known that movie studios are reluctant to give Apple too much pricing freedom.

Another hurdle to consumer adoption has been the inability to burn downloaded movies to DVD, for easy viewing on a TV set. To circumvent that obstacle, Jobs previewed iTV, a device that will allow people to wirelessly view movies and TV shows they've downloaded to their Macs and PCs on their TVs. That device, expected to retail for $299, is probably the most exciting part of the announcement, but alas, iTV won't be available until the first quarter of 2007. Meanwhile, one of the longest running Apple iPod rumors of all time -- the mythical cell phone/iPod hybrid -- remained a no-show.

Apple needed to impress today, and I'm not quite sure it did. Competitors are encroaching more than ever, from Microsoft's (Nasdaq: MSFT  ) Zune media player to Amazon.com's (Nasdaq: AMZN  ) Unbox video download service. Even News Corp.'s (NYSE: NWS  ) MySpace is opening its own music store. I still have a lot of faith in Apple as company, but while shares receded to more comfortable entry points earlier this year, they're once again nearing heights that may prompt investors to wonder whether Apple can keep up with the market's high expectations, especially with rivals growing increasingly aggressive.

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Amazon.com and Disney areMotley Fool Stock Advisorrecommendations, while Microsoft is aMotley Fool Inside Valuepick. Let us entertain (and amuse and enrich) you with a free 30-day trial to the newsletter of your choice.

Alyce Lomax does not own shares of any of the companies mentioned.


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