Apple Unveils Movie Rentals, Thin Laptop at Annual Show

At the annual Apple show in San Francisco, chief executive Steve Jobs made two major announcements but only confirmed what bloggers had already sniffed out: iTunes will start renting out movies, and the company will offer a super-thin laptop.

Jobs's speech at the start of the Macworld Conference and Expo in San Francisco often serves as a state-of-the-industry pep rally. Jobs has used it to announce major products like the iPod and the iPhone. This year, the company focused more on incremental improvements to its product lines, underscoring the significance of two major trends in consumer electronics: slimmer, more portable computers, and online services that further blur the lines between television and computing.

The iTunes move, announced in a keynote presentation at the start of the conference, brings Apple into direct competition with a wide range of companies. Its rivals include online rental services such as Netflix, and Microsoft, which offers movie rentals through its Xbox 360 video game console.

Apple has not been able to do for online television and movies what it did for digital music. Jobs said yesterday that Apple's earlier movie-download efforts, with 7 million titles sold to date, "did not meet our expectations."

Its entry to the movie-rental business will therefore be a big test of whether downloading video is where the future lies, said James McQuivey, a Forrester Research technology analyst.

"If anybody can make this work, it's Apple, because they already have millions of users carrying around these video-compatible devices," he said. "If it doesn't work here, it's not going to work anywhere."

Until now, iTunes users had to spend about $10 to buy a downloadable copy of a movie if they wanted to watch a film on their iPhones or iPods. With the new service, new releases will rent for $3.99 each, while back-catalog releases will cost $2.99 -- the same price as at Amazon's Unbox video store. Rentals will be good for 24 hours after "play" is first hit, up to 30 days. ITunes also now stocks more than 100 high-definition movies, which rent for $1 more.

If it works, people may no longer visit retail stores to rent their movies, said Michael Gartenberg of Jupiter Research. "This has the potential to be really disruptive to the rental model," he said.

The new computer, the MacBook Air, got the loudest applause of the morning's announcements when it was unsheathed from a manila envelope to highlight its slender size.

Apple built anticipation for the trade show by blanketing San Francisco with cryptic ads aimed at potential customers and technophiles. This year's campaign -- "There's something in the air" -- was a cloaked reference to the new $1,800 laptop.

The Air is also a reference to the company's environmental consciousness: The computer's case uses materials that can be easily recycled at the end of its life, and Jobs pointed out that Apple has stopped using mercury and arsenic in its display components.

This year's speech also became a showcase for bloggers, who managed to steal the tech leader's thunder.

At the snarky and popular blog The Secret Diary of Steve Jobs, also known as Fake Steve Jobs, some readers were complaining about the lack of big surprises from the real Jobs. (The blog is written by an editor at Forbes magazine who pokes fun at the technology world by posing as the Apple chief executive.)

"This isn't news," complained one poster, as the event wrapped up yesterday morning. "It's confirmation that the rumor sites were correct."

At the tech news site CNet, one of the final blog entries filed from the Jobs keynote hit the same note.

"Something gives me the sense we're building, heightening the anticipation, soaking up the audience's attention before he hits us with the . . . nothing? Really, that's it?"

Staff writer Rob Pegoraro in San Francisco contributed to this report.