Apple Converges on Vegas

Brian Hicks

Updated January 10, 2007

Bill Gates may have given the keynote address, but it was Steve Jobs who stole the show on Tuesday at the Consumer Electronics Show in Las Vegas-the world’s largest trade show for gadget freaks.

The Apple(AAPL:Nasdaq) chairman unveiled both a new mobile phone and a set-top box that allows people to stream video from their computers to their television sets. The announcement ended months of speculation and intrigue surrounding the products.

Of the new phones, Jobs said Apple’s new product would "reinvent" the telecommunications sector and leapfrog the current generation of mobile phones.

Aptly named the iPhone, the new device essentially marries Apple’s market-dominating iPod to the mobile phone. Larger than the iPod, the new phone features a wide touch screen and an internet connection. Additionally, the 3.5-inch screen works both horizontally and vertically.

The new phone is designed to grab a share of the $127 billion mobile phone market. Analysts anticipate that Apple could sell as many as 4.9 million of the revolutionary units this year alone.

By cashing in on its dominance in the MP3 market and converging that with its phone offering, Apple hopes to add some $1.5 billion in sales to its top line over the next year. The device is expected to retail for about $499 and will allow users to combine calls, messaging and music in a single device.

But as promising as Apple’s new phone may be, it is the company’s convergence with TV that may ultimately prove to be its most profitable unveiling.

Known as Apple TV, the company’s latest device is designed to close the gap between computers and televisions. Like the iPod before it, it will allow users to download material from other devices.

Initially introduced in September, it has an internal hard drive with 40 gigabytes of storage. With it consumers will be able to wirelessly transfer video files to the set-top box and watch them on the bigger screens.

At a cost of $299.00 each, these new devices will work in tandem with Apple’s iTunes. Users will be able to use the box to buy music, videos, and movies from the site.

In a concurrent release, Apple also announced that it has reached an agreement with Viacom Inc.’s Paramount Pictures to offer their movies for sale on the iTunes site.

In all, the company will sell 250 movies on the site.

Demonstrating the new device, Jobs said, "It’s really, really easy to use." Using the set-top box to show a video clip of "The Good Sheppard," the Apple chairman remarked, "It’s got the horsepower to do the things we like to do."

The new Apple devices continue the trend towards convergence, which allows users to take and use their digital content anywhere, whether on mobile phones, Blackberry devices or televisions.

"For years, we talked about converging products," said Gary Shapiro, President and CEO of the Consumer Electronics Association. "What defines the 2007 International CES is that it is about the ‘new convergence’: the convergence of content, services, and products."

The 2007 edition of the Consumer Electronics Show opened Monday and will run through Thursday. With nearly 150,000 attendees from some 130 countries, the show not only allows over 2,700 businesses to display their products, but sets the tone for the rest of the year.

All of which was certainly not lost on Bill Gates. He too spoke at length on convergence and introduced products from Microsoft that would allow users similar functionality in moving digital content away from the home desktop.

But as amazing as Gates’s presentation was-including its "Synch" device, which allows users to take calls and check their emails while driving-it was his arch nemesis at Apple who made the headlines. For its part, all Microsoft (MSFT:Nasdaq)could offer was a lame "me too."

So while the backdating of options by Jobs at Apple is still being discussed, it is now a much smaller topic. Once again, Apple has stolen the show.


Wishing you happiness, health, and wealth,




Steve Christ, Editor 

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