Apple Eyed for Slim Laptop, Online Film Rentals

By Scott Hillis, Reuters  |  Posted 2008-01-10 Email Print this article Print

Apple is expected to grab the spotlight with an ultra-slim laptop computer and online movie rentals at its biggest annual show.

SAN FRANCISCO (Reuters) - As the annual Consumer Electronics Show in Las Vegas winds down to lackluster reviews, Apple Inc is expected to grab the spotlight with an ultra-slim laptop computer and online movie rentals at its biggest annual show next week.

The new products are seen more as enhancements to Apple's current offerings rather than ones that pack the "wow factor" of last year's star attraction, the iPhone.

Next week's annual Macworld event in San Francisco is the favorite venue of Apple Chief Executive Steve Jobs to roll out new products and chart the company's course for the year.

His showman-like pronouncements also increasingly set the agenda for the computer and electronics industries, and have in recent years overshadowed CES, held in Las Vegas around the same time.

Apple gives no hint of what will be announced, so guessing what Jobs has up sleeve is a favorite pastime of analysts and industry executives.

Analysts expect a computer half as thick as Apple's current MacBook lineup, but using flash memory chips like those found in its iPod music players rather than a hard drive.

"The energy seems to be around a smaller-form-factor laptop computer," said Charles Golvin, an analyst with Forrester, a market research firm.

Notebooks have been one of Apple's strongest segments. In its fourth fiscal quarter ended last September, the company sold 1.34 million MacBook and MacBook Pro laptops, up 37 percent from a year earlier.

"What I'm guessing we might see from Apple is something a little more recognizable as a MacBook device, as a derivative of a laptop or tablet rather than a cool new form factor that sits between laptop and mobile phone," Golvin said.

Many also think Jobs will announce that customers will be able to rent downloaded movies from Fox, Warner Bros and others though its iTunes online store, a move that could shake up the $9 billion U.S. movie rental market.

"I think the rentals are a bigger deal," said Shaw Wu, an analyst with American Technology Research. "Apple has just simply not served that market yet and I think that's going to open up a whole new revenue opportunity."

Anticipation that Jobs will wow everyone with groundbreaking new products tends to drive Apple stock higher in the days ahead of Macworld, but can set shares up for a fall if the new products don't live up to expectations.

Although Apple shares, dragged down by mounting fears of a U.S. recession, have fallen about 11 percent since topping $200 on Dec. 26, they rose 4.8 percent on Wednesday to $179.40.

The shares rose 8 percent the day Jobs unveiled the iPhone at last year's Macworld and have risen more than 90 percent over the past year on bullishness over sales of iPhones and Macintosh computers, which have been gobbling up market share.

And Apple has fared better than other computer companies such as Dell Inc, which has fallen 15 percent since the start of the year, and Hewlett-Packard Co.

"Apple's still going to be one of the better names to be involved in in the tougher environment. The product cycles are so strong," said Wu, who has a price target of $210 on Apple shares.

Many industry analysts see the polished message of Macworld as a welcome relief from the chaos of CES and its familiar parade of ever-larger televisions, sharper video cameras and slimmer cell phones.

"Apple didn't need to take thunder from CES, there was nothing to take," Michael Gartenberg, an analyst with Jupiter Research, wrote on the company's blog.

(Reporting by Scott Hillis; Editing by Gary Hill)

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