We all knew iTunes Movie Rentals were coming, all that was left for Jobs to announce were the details.

The iTunes Movie Rental store launches today in the US (later this year for the rest of the world), with rentals costing $3.99 for new releases, and $2.99 for library titles. Renters have 30 days to begin watching a movie, and then 24 hours to finish watching it once they do. Every major studio is on board, and Apple's rental store launches with over 100 titles (1000 promised by the end of February), with new releases appearing 30 days following DVD release (which perhaps indicates some hesitation on the part of studios to embrace a new format -- no surprise there).

At first glance, Netflix would appear to have a leg up on Apple. Unlimited streaming for a little as $8.99 per month is probably a better deal for most consumers than $4 per movie strapped to a 24 hour viewing window. But where Apple's system shines is in its convergence with other devices. Whereas Netflix can only stream to Windows PCs, Apple can stream or download rented movies to both the Mac and PC, as well as to any current generation iPod, the iPhone, and the Apple TV.

Jobs said in his keynote that many companies have tried to figure out how to stream movies from the PC to the TV -- Apple tried, Microsoft tried, TiVo tried, VuDu tried. All of them failed, according to Jobs. In fact, even though Jobs touted the 125 million TV shows and 7 million movies sold so far via iTunes as miles ahead of competitors, he still said they missed their sales goals. That is one of the reasons, according to Jobs, that Apple embraced the idea of rentals, and one of the reasons they revamped the Apple TV so that it could rent and stream video directly from iTunes.

Image via TechCrunch.

Jobs demonstrated the ability to browse iTunes and rent movies with a single button click directly through the Apple TV. The device can also download and stream podcasts through iTunes, sync with computer content (as before), connect to YouTube, and grab photos from Flickr and .Mac.

The Apple TV updates will be pushed to current owners as a free software update. To entice new buyers, Apple lowered the price of the device by $70.

MacBook Air

The other major announcement we all knew was coming: the Macbook Air. Speculation that Apple would release an ultrathin notebook has been flying all weekend, and Apple delivered today with one that redefines the meaning of "thin." Clocking in at just 0.16" (at its thinnest end, 0.76" at the thickest), the 3 lbs. Macbook Air sports a 13.3" LED backlit screen, 1.6-1.8 GHz Intel Core2 Duo processor, 2 GB of RAM, a 80 GB HD (64 GB SSD option), 802.11n + Bluetooth 2.1/EDR, a reported battery life of 5 hours, and no optical drive.

Drawing oohs and aahs from the crowd, the Macbook Air also has a multitouch track pad that allows for a lot of new gestures -- like rotating photos by pivoting your thumb and forefinger.

While Jobs was clearly tickled by just how thin the Air is (he introduced it by sliding it out of an envelope and then showed a TV commercial playing off that quality), he was also clearly proud of the steps that Apple has made to make the production of the machine more environmentally friendly. It is the first Apple product with a fully mercury and lead free display, BFR-free circuitry, and due to its form factor, it can ship with 56% less packaging.

Image via TechCrunch.

All that's remaining is to find out of the MacBook Air can help my vertical leap... (sneaker joke... anyone?).

iPhone/iPod Apps and Time Capsule

Jobs made two other major, albeit less buzzworthy, announcements at Macworld. After briefly mentioning his excitement over the iPhone SDK coming next month, he announced a handful of new apps for the device. These include an improved mapping application (with location finder), webclips (like bookmarks for your phone's home screen), and multi-SMS. The new apps are all available as a free software update for iPhone users.

The iPod Touch also got some love with the announcement of five new applications: Mail, Maps, Stocks, Weather, and Notes. Inexplicably, while the iPhone gets a free update, the iPod apps (which already exist on the iPhone) will cost users $19.99. That prompted engadget's Ryan Block to chide Apple for being, "SO weak." Agreed.

The first new product Apple announced at Macworld 08 was a wireless external hard drive. Time Capsule, as it is called, comes in 500GB and 1TB flavors and syncs wirelessly with OS X Leopard via its 802.11n base station to back up your files. The device will ship in February.

Last year it was the iPhone, two years ago it was the Intel iMac, the year before that the iPod shuffle and the Mac mini. While clearly, not every year is as exciting as the last, Apple always has something in store for us. History would suggest that this year's announcement won't be as earth shattering as the iPhone last year, but one never really knows what the Great and Mysterious Jobs has planned.

An interesting sidenote: I am perhaps the only ReadWriteWeb author who isn't a regular Mac user. But if prediction number 1 pans out, then I see that changing very quickly.

1. An Apple subnotebook - This one has been kicking about for years. The rumor is that Apple will announce some sort of subnotebook (think: 10.4" screen or smaller) that has no optical drive, a solid state drive, and maybe even a multi-touch screen. What lends more credence to the rumor this year, perhaps, is that the market for these small devices is heating up. The Asus EEE PC is flying off shelves and Everex is planning the release of a subnotebook based on the Via NanoBook reference design (Packard Bell is the NanoBook OEM for Europe). As hot as UMPCs are, and even though CNBC claims they're already in production (though, they say it will have a 12" display, which I really don't consider a subnotebook), this one still seems kind of unlikely. I hope I'm wrong, but 45% probability.

2. 3G iPhone announcement - AT&T's CEO says it is coming in 2008, and a 3G iPhone is a no-brainer. It will help Apple meet their initial sales goal of 10 million units by the end of 2008. 60% probability.

3. iPhone 2 - The reason they don't already have a 3G iPhone, according to Steve Jobs, is that battery technology isn't good enough to support it. So if you're going to release a 3G iPhone with a new battery, why not just announce the second version of the thing? The iPhone 2 would have more memory, an improved camera, and built in support for third party apps. These are all things that seem likely in future iterations of the iPhone, so if the 3G iPhone is coming, I think other improvements are likely. 60% probability.

3a. New iPods - As long as we're getting a new iPhone, we might as well get new ipods, right? Well, the iPod product line was just updated in September, so it is unlikely that it will be again so soon. But if there is an iPhone with a larger flash drive on the way, expect the iPod Touch to get the same treatment. A 128 GB SSD iPod Touch would rock. 30% probability.

Mac subnotebook concept image via MacRumors.com.

4. News about iPhone SDK - When the iPhone arrived, Stave Jobs said the Internet was its SDK. That certainly drove the creation of a lot of mobile web apps for the iPhone, and was a smart way to promote the iPhone's great Internet browsing capabilities, but it wasn't enough for many users. That's why Apple is planning a real SDK for the iPhone for February. With Google's Android on the horizon and Yahoo! today announcing an open mobile widget platform, the time seems right for the iPhone SDK. This one isn't really a rumor, so 100% probability that we hear about it at Macworld.

5. iTunes movie rentals - This one also isn't really a rumor. The New York Times sort of confirmed it two weeks ago and we've been hearing about Apple cutting deals with studios for 24-rental downloads via iTunes for weeks now. With Netflix planning a set top box of their own, it makes sense for Apple to bring rentals to iTunes (and Apple TV). This one is 100% probability - all that's left is the details.

6. The future of DRM - DRM is dead, but Apple wasn't invited to the party. Of the 4 major labels that have announced plans to sell DRM-free music, only one (EMI) is doing so with Apple. Universal and Warner are dealing with Amazon right now, and Sony BMG is being whacky and selling their DRM-free download in stores (yeah, I don't get it either). So who knows what the future of DRM at Apple is, but you can bet Jobs will address it with a 95% probability (and 100% probability he'll remind us of his memo to the music industry in the process).

7. Jay-Z and Apple form record label - One of the more fun rumors to crop up in the past week or so, is that rap mogul Jay-Z has joined forces with Apple to start a new record label. One would have to assume that a record label run by Apple would use digital distribution exclusively, which isn't necessarily a bad idea. Jay-Z has his hand in everything, and Apple does always end the Jobsnote with a musical performance... still, 10% probability.

8. New Cinema Display - We haven't had new models since 2004. The longest time between updates since the product line began in 1999. The time seems right for an update, perhaps with official Windows drivers? We'll, but I'll cheat and make this one a push: 50% probability.

9. The return of the Newton - There are many who think/hope/wish/yearn that Apple will release a tablet PC. Their multitouch tech would make for one killer tablet, and people are more responsive to non-PC computing devices now then they were 10 years ago. But there is a problem with this idea: Apple already has a PDA, and it's called the iPhone. So the probability of them launching a larger touchscreen device right now is 0% in my opinion, because it runs the risk of cannibalizing some of the iPhone/iPod Touch market. However, I'll give 40% probability to a touchscreen Macbook.

Steve Jobs photo credit: dfarber

While the market for Internet TV is growing steadily — survey after survey shows that people are consuming more video online than ever before — as 2007 draws to an end, Google-owned YouTube is still the number one video destination site.

This isn’t just true in terms of traffic but also in terms of “mind share”; when people talk about online video they often refer only to YouTube. As a result, a number of hardware companies have added YouTube support to their devices in 2007, such as YouTube-compatible cameras and mobile phones capable of viewing and publishing video to YouTube.

And then there’s the strong relationship between Google and Apple, which this year has led to YouTube support being added to both the AppleTV and iPhone, with a change in the video format to boot. Apple successfully persuaded YouTube to start re-encoding its video catalog to the much higher quality (and Apple-preferred) H.264 codec.

Not one to rest on its laurels, YouTube introduced a number of new features of their own, including a redesiged player, the introduction of interactive overlay ads, better copyright filtering, and — like many Google properties — improvements to its mobile offering.

What can we expect in 2008?

Coinciding with improvements to the quality of Flash video, YouTube co-founder Steve Chen has said that the company is currently testing a version of its player that detects the speed of the viewer’s Internet connection and serves up higher-quality video if the user wants it. According to Chen, we can expect to see higher-quality playback on YouTube as early as February 08.

Also in part related to an upgrade to Flash Lite (Adobe’s version of Flash for mobile devices) that adds full support for Flash video, along with the launch of Google’s mobile phone-oriented OS called Android, 2008 will likely see YouTube being offered on an ever greater number of mobile devices.

On the content front, with Google stepping up its monetization options for YouTube, including expanding its ad-revenue share scheme with independent producers, 2008 may well see more professionally-produced video being offered on the site.

Television networks and movie studios reluctantly experiment

In 2007 we’ve seen a large amount of online experimentation from the television networks (both in the U.S. and UK) and, to a lesser extent, from the major movie studios too. The problem, however, is that many seem to have been doing so with their hands tied behind their back.

In September, we took an extensive look at what the U.S. television networks, ABC, CBS, NBC, Fox, and The CW, were offering on their own websites. Dan Langendorf wrote at the time:

The good news: Major U.S. television networks continue to embrace Internet technology and are putting their shows on the Web for online viewing, just like they did last year.

The bad news: Their online offerings remain sporadic; their Internet strategies feel like “we have to” rather than “we want to”; and — worst of all — they still haven’t embraced the idea that we are living in a new digital world, with different rules, participants, and expectations all around.

This year also saw a number of new efforts by the U.S. television networks to offer their content elsewhere on the Web (not just through their own sites), embracing both ad-supported models and paid-for rental and to-own.

On the ad-supported front, the big news was the launch of the much awaited video destination site Hulu, a joint venture between News Corp. and NBC that offers streaming video of both companies’ television and film content along with offerings from other studios such as Sony Pictures Television and MGM. While many industry pundits were skeptical of Hulu’s chances, upon viewing a Beta version of the site, early reactions have been positive.

NBC, who in some ways seem the most willing to experiment, also launched a Beta version of NBC Direct, an Internet-based catchup TV service. We came away unimpressed by NBC’s thinking, however, noting that shows are only available up to seven days after broadcast, and once downloaded, expire after 48 hours.

With regards to paid-for downloads of television shows, 2007 was also the year in which NBC and Apple’s iTunes divorced. Following a very public spat, NBC chose not to renew its partnership with Apple and is instead selling downloads through Amazon’s UnBox, Sandisk’s Fanfare, and Netflix, among others.

In July we took a look at the Internet TV offerings of the five major UK television broadcasters, noting that the then yet-to-launch iPlayer from the BBC looked the most promising.

However, when the iPlayer finally launched it wasn’t without controversy. The BBC was accused of being corrupt due to the iPlayer’s reliance on Microsoft technology and its lack of Mac/Linux support, and UK ISPs were reportedly critical of the application’s use of peer-to-peer technology and potentially high bandwidth costs. Answering the former, in October the BBC announced it had partnered with Adobe to develop a streaming version of iPlayer based on Flash that will be compatible with Windows, Mac and Linux PCs, and possibly mobile devices in the future.

In the movie download space we compared eleven download stores, concluding that “it’s still very early days in the paid-for video download space, where so far, greater competition hasn’t produced nearly enough innovation in terms of pricing and convenience — particularly in relation to copy-protection.”

What can we expect in 2008?

There’s evidence to suggest that watching full length TV shows online is becoming increasingly popular, in part due to higher broadband penetration rates but also because the studios are making more of their content available on the Web. Encouraged by this, we hope to see the television networks and movie studios take greater risks, although don’t expect the constraints of traditional scheduling and release dates or geographical territories to go away anytime soon.

One likely possibility is that iTunes will start to offer online movie rentals, putting Apple in direct competition with Netflix.

In the UK, broadcasters, BBC, ITV and Channel 4 have announced an initiative to develop a combined service for accessing their on-demand and catch-up services. The new service is currently known under the working title “Kangaroo”, and if approved by the BBC’s governing body, could emerge in 2008.

Internet TV comes to the desktop

The year 2007 is definitely the year of the desktop Internet TV application, with a number of companies launching products that aim to combine a TV-like viewing experience with the best of the Web.

Joost, founded by the team behind Skype, is the most high profile, along with Italian billionaire Silvio Scaglia’s Babelgum. Add to list VeohTV, Zattoo, Livestation, Next.TV (backed by HP), Adobe’s Media Player, and Microsoft’s Internet TV, and it becomes clear how crowded this space has got in 2007.

What can we expect in 2008?

The jury is out on whether people are really willing to leave their web browser and use a number of separate desktop applications in order to get their Internet TV fix. A big question mark also remains around whether the various desktop offerings will be able to secure enough compelling content in order to compete with the Web as a whole.

PC-to-TV and set-top box ambitions

Admittedly we at last100 are more obsessed with PC-to-TV and Internet connected set-top boxes than most industry watchers and consumers alike — 2007 has been a fairly busy year for these type of devices.

The biggest launch was that of the AppleTV, which at the time Steve Jobs hailed as the final piece to Apple’s digital lifestyle strategy, since the device bridges the gap between the PC and the television. However, the AppleTV has been far from a smash hit, with worldwide sales reportedly as low as 400,000 units, a dwindling amount of video content following the NBC Universal loss, and Jobs himself repositioning the device as the company’s “hobby”.

In comparison to the AppleTV, which feels far too tied to the iTunes store, in 2007 TiVo added numerous third-party web services to its line of broadband-enabled DVRs.

This year saw the launch of the Vudu set-top movie box and accompanying download store.

Microsoft and its partners’ unveiled the latest Windows Media Extender devices, with new functionality including higher-speed wireless and DivX support.

Sandisk also entered the PC-to-TV space, with the launch of TakeTV and download service Fanfare.

But perhaps the two companies who best positioned themselves in 2007 to eventually solve the PC to TV problem, along with getting Internet content into the living room, are Microsoft with the XBox360 and Sony with its PlayStation 3.

What can we expect in 2008?

While the market for PC-to-TV devices will remain modest, getting Internet content directly into the living room will remain the pursuit of many companies, particularly Apple, Microsoft and Sony. For example, we’re pretty confident Apple will take a second stab at the AppleTV, and Microsoft and Sony will ramp up their efforts to offer more video and other content through their respective game consoles. Also expect TiVo to continue to add more web services to it DVRs.

Other companies to watch in 2008, in relation to set-top box activity, are Netflix, DivX and possibly Joost.

DivX support is everywhere

Another trend in 2007 was an increasing number of devices supporting DivX video, most notably Microsoft’s Extenders for Media Center and XBox 360, as well as forthcoming DivX support on the Sony PlayStation 3. Additionally, DivX has developed a reference design for its own DivX enabled set-top box, and Sandisk added DivX support to its Sansa line of portable media players.

What can we expect in 2008?

More of the same.