Washington, D.C. (January 15, 2008) -- Apple today gave its disappointing Internet TV device a face lift,  adding High-Definition movies and lowering the price to $229.

At this week's Macworld conference, Apple CEO Steve Jobs said the company is unveiling new software for the  Apple TV, allowing owners to rent movies from the iTunes store which can be played back on a widescreen HDTV.


The ITunes movie catalog will consist of more than 1,000 titles including more than 100 in high-def. The list will include films from all major studios.

Jobs also said the set-top's price will be lowered from $299 to $229.

"With the new Apple TV and iTunes Movie Rentals, movie lovers can rent DVD-quality or stunning HD movies from their couch with just a click of a button," said Jobs. "No more driving to the video store or waiting for DVDs to arrive in the mail."

Apple introduced the Apple TV last spring, but sales have lagged, reaching less than 500,000, according to news reports. The set-top can send PC-based audio and video files directly to a widescreen TV without a PC connection.

Many analysts have pointed to the device's lack of high-def content as a reason for its disappointing sales. Consequently, Apple was expected to announce a high-def feature at this week's Macworld.

Jobs said the standard-def movies will cost $3.99 for new releases and $2.99 for older titles; for high-def, the cost will be $4.99 for newer titles with $3.99 for older films.

The software enabling the movie rentals will be provided free of charge to existing Apple TV owners.

The new $229 Apple TV will be available in two weeks, the company said.


Commentary:
Apple's decision to lower Apple TV's price to $229 is eerily similar to Toshiba's announcement on Monday that it's lowering the price on its HD DVD players.

When you're losing -- and losing bad -- you lower the price.

And with Apple TV's sales numbers to date, it's been a loser.

However, even at $229, Apple TV will struggle to generate significant sales,

Americans have demonstrated that they have "set-top fatigue,"; their interest in buying yet another TV set-top is limited at best. Just ask Moviebeam, or even the retail division of TiVo.

Set-top fatigue is one of the reasons why Blu-ray and HD DVD player sales have lagged as well; it's not just the format war. Prices need to be lower to persuade consumers to give a new TV set-top service a chance, particularly in a down economy.

If Apple really wants Apple TV to succeed, $229 is a good start. And, adding the high-def movies is a no-brainer.

But most consumers will decide that they can get those HD (and SD) movies from more convenient (and easier-to-use) sources such as cable's Video on Demand, premium movie channels and your basic DVD player. (And, in time, even the Blu-ray players will be under $200, if not lower than that.).

The high-def picture quality will likely be much better on VOD, the high-def disc players and the premium movie channels as well.

Plus, consumers won't have to invest in a new product that seems foreign to them, such as the Apple TV device.

Consequently, I stick to my prediction that Apple TV will be a bust.

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Swanni (Phillip Swann) is president and publisher of TVPredictions.com. He has been quoted in dozens of publications and broadcast outlets, including CNN, Fox News, Inside Edition, The New York Times, The Washington Post, The Chicago Tribune, The Financial Times, The Associated Press and The Hollywood Reporter. He can be reached at swann@tvpredictions.com or at 703-505-3064.

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