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Apple's iTV Turns On Home Integrators

Apple's latest digital home foray -- iTunes movie downloads and the planned "iTV" media streaming device -- drew cheers from integrators and home networking vendors, who say the offerings could amplify the digital entertainment ecosystem.

iTunes movie downloads and the planned "iTV" media streaming device

On Tuesday, Apple CEO Steve Jobs unveiled a movie download service for the online iTunes Store as part of the rollout of iTunes 7, a new version of its digital music/video jukebox software. He also took the wraps off three new iPod models and a device, code-named iTV, that will enable users to wirelessly stream movies, music, photos, podcasts and TV programs to big-screen TVs, set-top boxes and home entertainment systems. Plans call for Apple to ship iTV, which doesn't yet have a final product name, in early 2007.

Though Apple has a limited channel program and little or no direct contact with home integrators, the Cupertino, Calif.-based company does have well-designed products with user-friendly interfaces, high-profile partnerships, great marketing and deep customer penetration. That's enough for integrators and providers of home networking products and services, who expect Apple's new multimedia wares -- along with its latest Intel-based Macintosh computers -- to give a jolt to the digital home solutions business.

"Knowing what they've done with Macs, the new launch is probably going to work," said Eric Lee, president of Integrated Control Experts, a Chicago-based residential systems integrator, at the CEDIA Expo in Denver. "There's the iPod craze, a Mac version of Media Center Edition, and we've had good success using Mac minis as an iTunes media server. This new [product] launch is going to be huge."

Many digital home integrators agree, considering the effect iPods have had on the custom installation and home integration market. Just two years ago, a lot of integrators were against MP3 files, saying that compressed music would degrade the quality of the high-end audio systems they were installing for discerning customers.

Since then, however, most customers have iPods and large collections of MP3s they want to access from anywhere in their homes. One of the big trends at this year's CEDIA Expo is the rollout of more audio distribution systems with iPod integration and MP3 management and storage systems.

"Apple did a fantastic job bringing MP3s to the masses, turning on an entire industry to compressed music and making iPods an accepted source," said Eric Bergum, executive vice president of TheaterPro, a systems integrator and home theater installer in Amherst, N.Y. "I care about audio fidelity and image quality, so I fear a lowering of standards. But it comes down to what my clients want and how I make what they use day-to-day work as well as possible."

Apple isn't really doing anything new, since downloadable movies and media extender devices have been available for some time, according to integrators. But sales of both products have been low, and no vendors -- including Microsoft -- have been able to generate the customer interest and demand the way Apple can. "This is nothing revolutionary. iTV doesn't really raise the bar on innovation. But if Apple can help increase awareness, awesome," said Mike Seamons, director of sales and marketing at Westerville, Ohio-based Exceptional Innovation, which makes the Windows XP-based Life|ware home control and automation system. "Our commitment is to help teach end users that they can do more. This can do nothing but help."

Apple's marketing savvy and past performance also aren't lost on Nick McCullough, president of Link Your House, a home integrator in Norcross, Ga., who has seen solutions based on Windows Media Center PCs, Microsoft Xbox 360 gaming and media extender devices, flat-panel displays and MP3 audio distribution jump over the past year.

"Apple has a lot of loyal customers, and the iPod has over 70 percent of the [music player] market share," McCullough said. "I think the new products will have a TiVo-like effect, where people can grab shows and movies and watch them wherever and whenever they want. People want convenience. They don't want to be held hostage."

McCullough and other integrators say an iTV solution will have the same effect on business as iPods have had. iPods have helped integrators sell more audio distribution systems and enhancements, and iTV stands to help them sell more storage products, flat-panel TVs and portable devices, despite the low image quality of downloaded movies. Though profit margins on many of those products are dropping, installers say they can make it up by providing high-margin consulting and integration services.

"These new products won't isolate integrators," said Tim Hennen, a principal of IVCI HomeVision, a Hauppauge, N.Y.-based integrator. "Apple got iPods into everyone's hands. This [iTV] is going to get people excited about portable and distributed video. The iTV products will serve as another source, another device to integrate."

Terry Wisniewski, a systems engineer at Digital Entertainment Systems, an integrator in Rogers, Ariz., agreed. "It wasn't Apple that created and drove whole-house audio. It was our industry, the residential integrators," he said. "As far as the video quality goes, some people will accept it, and others won't. But it will still have a place."

Jan-Luc Blakborn, Hewlett-Packard's North American director of digital entertainment, welcomed Apple's new digital media play, even though HP is a direct competitor to Apple.

"It signals what we've known all along: People will consume content from a wide variety of sources, and they want to do that simply," Blakborn said, adding that HP is shipping its Media Smart High-Definition LCD TVs with integrated media streaming capabilities and a new line of improved Media Center-based PCs. "It's all about connecting the integrator with the end user and creating a fully integrated solution. Now we all have more products that answer the question of what makes up a digital solution."

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