Jobs' announcements yesterday in the 2008 edition of his keynote address were less immediately groundbreaking, but in the long run may prove just as significant. Certainly, the MacBook Air will influence laptop designers and accelerate Apple's push to eliminate storage drives. But the development that will be most disruptive is Apple's success in negotiating downloadable movie deals with every major Hollywood studio.

Boost for Apple TV?

The news that version 7.6 of iTunes allows users to rent recently released Hollywood movies has focused a lot of attention on Netflix and Blockbuster, two companies that rent DVDs by mail. Despite the fact that both also offer downloadable movies, the two companies saw their share prices drop yesterday, as investors nervously eyed the huge iTunes user base (roughly 52 million, compared with 7 million Netflix subscribers).

It will be a bit before iTunes competes on a level playing field with either Netflix or Blockbuster. The iTunes store currently offers slightly more than 100 movies for rental, with another 900 expected to come online soon. But as more movies become available, Apple's promise of portability from computer to iPod will grow increasingly attractive. As Michael Gartenberg, vice president and research director for emerging technologies at Jupiter Research said, "For many people, if it can't be put on an iPod, then it doesn't exist."

But the real boost, Gartenberg predicted, will be to Apple TV, Apple's device for storing and displaying video content on televisions. Owners of Apple TV units will be able to rent high-definition versions of recent movies, which Gartenberg thinks will help boost the appeal of Apple TV.

"This is not a surprise," Gartenberg said, "since most folks will want HD content on their TVs with that resolution. The fact that Apple TV supports HD is important since that's the device that's connected to those high-res screens."

Making the Format Wars Irrelevant

One industry that may be blindsided by the recent Apple movie rental deal is DVDs. For more than a year, HD DVD and Blu-ray have been locked in a difficult and costly format war, but the prospect of Apple's easily available HD movie downloads may render the HD DVD vs. Blu-ray dispute moot.

Gartenberg agreed that consumers will eventually prefer HD downloads over disc purchases, but predicts that it will take some time for that to happen. "There's a still a format war going on," he said, "and downloading HD content, while viable, still takes awhile for most folks, given their Internet connections."

Certainly, however, the percentage of homes in the United States with broadband access to the Internet is growing steadily, and a number of manufacturers (including Apple) are rolling out Internet-ready devices specifically for downloading and storing HD content. Downloadable HD movies may still be in the preview phase, but the main feature is right around the corner.