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As widely expected Apple, among others, reintroduced the Apple TV at an event on Wednesday in Calfornia.
While the iPod upgrades and the iOS 4.2 upgrade in November has put Apple right on the front seat for the upcoming Holiday season and the ongoing back-to-school season, it remains to be seen whether the Apple TV becomes a blockbuster as iPod, iPhone and iPad.
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The new Apple TV was initially launched in 2006, but failed to gain popularity. Apple hopes that the diminutive console will jazz up the living room by offering high quality entertainment at a cheap price.
With a significantly smaller form factor, the new Apple TV is just one quarter the size of the original and focuses on rentals and streaming from computers and services such as Netflix as opposed to storage. At $99, it is $130 cheaper than the existing model.
Apple TV, which earlier only offered movies for sale, will now only rent them out to keep prices down. The rental price of movies on the same day they're available on DVD will be $4.99 and will get cheaper as time goes by.
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Owners of Apple TV will also be able to hook up to YouTube for videos, Netflix for movies, Flickr for photos and iTunes for podcasts.
Through Apple TV, the gadget maker can leverage its iTunes store and rent out HD movies and TV shows at competitive prices. A simple UI focuses on the media and content, incorporating reviews and ratings from the internet, allowing the user access to one-click renting of media or streaming from other sources such as an iPad via its AirPlay feature.
The company has already tied up with ABC and Fox network that will allow Apple TV users to stream TV shows from these networks for as little as $0.99 and is also in talks with other networks and hopes other film and TV distributors will "see the light."
However, Apple TV is not without its odds.
The key concern is about the terms that Apple is seeking for rental deals and, according to market reports, Apple wants to keep atleast 30 percent of the rental fee.
That revenue-sharing breakdown is similar to agreements Apple has struck for TV show and movie downloads from iTunes. But executives point out that iTunes downloads are priced at $1.99 to $2.99 and say they are hesitant to replicate those deals at prices of 99 cents.
Still, market analysts said media companies may be forced to strike a deal with Apple, if the 99-cent rental proves popular among customers.
At the same time, the 99-cent deal could hit DVD sales, as broadcasters and producers have made millions of dollars licensing entire series and packaging them into DVDs.
Also, Apple could face bottlenecks from the present TV-viewing habits.
"We believe, unlike in the case of the iPod, iPhone, or the iPad, the Apple TV faces stronger headwinds from current TV-viewing habits for much wider adoption," analyst Rajesh Ghai of ThinkEquity said in a note to clients.
Ghai, who has a "buy" rating and $350 price target on the stock, said though the product clearly addresses several shortcomings of the earlier version, he believes TV viewers may need to make a significant departure from their current concept of real-time.
"Hence, we are a little skeptical whether this version of the product will be a similar blockbuster as recent product releases from the company," Ghai said.
