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Apple Fights & New iPods Take Centre Stage

By Wire Services | Sunday | 02/09/2007

Apple is set to be on centre stage this week following its fallout with US TV Network NBC and the pending launch of a new iPod range on Tuesday night in San Francisco.

Following last week's fall out with NBC, Apple has issued a press release claiming NBC Universal wanted to more than double the wholesale price charged for its television shows.The iTunes owner made the claim after NBC announced that it would be pulling its programming from the download service when its contract with Apple expires in December.

Apple said that it would not be carrying NBC shows from the 2007-08 season when it begins in September, even though there would be three months left on the contract. It claimed that NBC's price demands would have pushed the retail price for the network's shows up to $4.99 per download, a dramatic difference compared to the $1.99 charged for ABC, CBS, Fox and The CW programming.

"We are disappointed to see NBC leave iTunes because we would not agree to their dramatic price increase," said Eddy Cue, Apple's vice president of iTunes. "We hope they will change their minds and offer their TV shows to the tens of millions of iTunes customers."

The company added: "Apple's agreement with NBC ends in December. Since NBC would withdraw their shows in the middle of the television season, Apple has decided to not offer NBC TV shows for the upcoming television season beginning in September. NBC supplied iTunes with three of its 10 best selling TV shows last season, accounting for 30 percent of iTunes TV show sales."

NBC, however, has disputed Apple's claim. In a statement, the company said: "We want consumers to know that all our returning series, including new episodes, will be available on iTunes through the remainder of the contract, which expires in early December."

However, this will preclude new shows such as Bionic Woman from being available on iTunes at all.

NBC's statement also said that programming would be available for download from its own website as well as hulu.com, its new joint-venture video sharing website developed with News Ltd.

Also high on the agenda for Apple is the launch of new iPod's in time for the end of year sales boom.

"It's an iPod refresh," principle analyst Rob Enderle of Enderle Group in Silicon Valley said. "That is what the buzz is."

Apple's iPod has become the most popular MP3 audio player in the world since its debut in 2001. Its most recent addition to the iPod line is the matchbook-size Shuffle introduced a year ago.

The full-size iPod has not been updated since a video-playing "fifth-generation" was introduced in October of 2005.

A recent Apple earnings report shows an unprecedented year-over-year ebbing of iPod revenue growth as customers opt for cheaper models in the line.

"The iPod line is in desperate need of an update," Enderle said.

Apple watchers theorize the California company is poised to reveal iPhone-inspired improvements such as enhanced wireless capabilities and a large-screen iPod for better video viewing.

A challenge facing Apple is that consumers are likely to expect iPods that mirror the innovations in the new iPhone, which the firm began selling in the United States in June, Enderle said.

"People will be expecting iPhone level quality," Enderle said. "There is a real good possibility that people will be disappointed."

Making an iPod model that amounts to an iPhone without mobile telephone capability would result in a daunting price tag, according to Enderle.

The 599 dollar price of an iPhone is at a discount due to a 200-dollar subsidy from telecom giant AT&T, which is the sole mobile telephone service provider for the devices.

"If you take out the subsidy, an iPhone is an 800-dollar device," Enderle said.

The timing of Apple's event could be to buff its image in the wake of fall-outs with Hollywood and music studios that want more money for content sold on the iTunes online music store paired exclusively with iPods, said analyst Mike McGuire of Gartner Research.

Apple announced in August that it will stop selling NBC television shows on iTunes because the studio wanted increased charges that would have more than doubled the price of each episode to five dollars.

A month earlier Universal Music refused to continue making its catalogue of songs available on iTunes because it wanted a price hike for them -- something Apple has firmly resisted.

Analysts agree that whatever Apple's chief executive Steve Jobs has in store for Wednesday, all eyes will be on Cupertino, where the company has its headquarters.

"Apple generates more news just saying it's going to make an announcement than other companies do with their announcements," said Jupiter Research analyst Michael Gartenberg, who declined to speculate on the event.

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