Educators who have ever spent an evening frantically calling several video rental stores in search of a particular movie for showing to their students in class the next day will appreciate a new online movie rental service unveiled Jan. 15 by Apple Chief Executive Steve Jobs.

Through Apple’s new online movie rental service, users can watch films instantly over a broadband internet connection or download and keep them for 30 days. They just have to finish watching the movie within 24 hours after starting.

Films will be available through iTunes within 30 days after they’re released on DVD. More than 1,000 will be ready by the end of February, at $2.99 for older movies and $3.99 for new releases, plus $1 for high-definition versions.

The service, which launched Jan. 15 in the United States and will roll out internationally later this year, will work on Macintosh computers, Windows-based machines, iPhones, iPods, or Apple TV set-top boxes, which have received a significant makeover.

The service targets consumers in general, and Apple hopes it will change the way people think of renting—and watching—movies. But educators, who no doubt will appreciate the ability to find and download temporary copies of movies on short notice for viewing in their classrooms, might be among the service’s top users.

Speaking at the Macworld Conference & Expo in San Francisco, Jobs acknowledged that Apple’s first attempt to deliver movies to consumers’ living rooms did not meet expectations. He also said customers have purchased only 7 million movies on iTunes, compared with 125 million TV shows and more than 4 billion songs. But he said competitors—such as, Netflix, Blockbuster, and Vudu Inc.—haven’t seen much more success.

“We’ve all tried to get movies over the internet and to the TV, and we’ve all missed,” Jobs said. “So we’re back with Apple TV, take two.”

The Apple TV set-top box always could stream videos and other multimedia wirelessly from a user’s computer to a TV. But now it’s possible to rent or purchase content directly on a TV through the set-top box—which now costs $229, down from $299—with no computer involved.

Many analysts expect downloading to become a popular method of movie consumption.

Apple’s foray into the online movie rental business was widely expected, but Jobs surprised some by pulling off alliances with all six major movie studios, including its fierce rival Sony Pictures and Universal, which stopped offering NBC Universal TV shows on Apple’s iTunes Store last fall after a spat over pricing and control.

The disagreement with Universal remains, Apple officials said. But Apple is forging ahead with its movie offerings, under terms similar to those Hollywood has dictated with other online movie providers.

“Studios have voiced their opinion that they don’t want to work with Apple, but they’re still doing so,” said American Technology Research analyst Shaw Wu. “That’s because there’s going to be a paradigm shift in the online movie space, and Apple is in the best position to lead that.”

With millions of people already using iTunes to download music or TV shows, Apple already has a coveted customer base, Wu said.

Jobs also unveiled a string of new features for the iPhone at the Macworld conference, showing how users of the combination iPod-cell phone-internet surfing device can now pinpoint their location on web maps, text-message multiple people at once, and customize their home screens. Jobs said Apple has sold 4 million iPhones during their first 200 days on sale.

Tapping another computer segment, Jobs took the wraps off a new laptop called the MacBook Air and touted it as “the world’s thinnest notebook.” It’s less than an inch thick and is just .16 inches thick at its thinnest point.

The new laptop, which has a 13.3-inch screen and a full-sized laptop keyboard, weighs 3 pounds and comes with an 80-gigabyte hard drive. But it does not contain a built-in optical drive for reading CDs and DVDs, and its $1,799 price tag could be a significant barrier for many educators.

Jobs also introduced new software for the iPod Touch music player that lets users process eMail and perform mapping functions like on the iPhone, using the gadget’s Wi-Fi features instead of a cellular network.

In addition, Jobs announced a new product called Time Capsule, which allows Mac users to back up their data wirelessly on a 500-gigabyte drive that will sell for $299 and another with a terabyte of storage that will sell for $499.

The potential usefulness of Apple’s online movie rental service wasn’t enough to impress investors and industry analysts, many of whom reacted to the company’s Macworld announcements with disappointment. Shares of Apple stock fell for two straight days after Jobs’ keynote.

Caris & Co. analyst Shebly Seyrafi said the newly unveiled MacBook Air’s price tag “might have been higher than people would have hoped for.” Investors also might be “incrementally” concerned that Apple’s iPhone was not updated so that it can connect to faster cellular networks, he said.

Wu said Apple also likely disappointed some investors who have simply come to expect endless revolutionary innovations from the Cupertino, Calif.-based company.


Apple Inc.