Apple seeks to seize digital TV market

The battle for control of the digital home reached a milestone on Tuesday as Apple began shipments of the Apple TV, the latest device designed to allow users to download, store and play internet content on their televisions.

The devices could be in customers’ hands as early as this week, according to people who said they had received emails from the company informing them that their Apple televisions had shipped.

Apple on Tuesday refused to confirm that it had sent the emails, saying only it was “on track to begin shipments in mid-March”.

The arrival of Apple TV comes as Microsoft and other big technology companies are stepping up efforts to bridge the gap between computers and television. Cable providers have also been racing to cater to customers who want to capture and play back digital content.

Microsoft announced plans in January to turn its Xbox 360 gaming console into a stand-alone set-top box for internet TV. The move will add to Microsoft’s existing online video effort, which is centred around its line of Media Center PCs.

Sony, Hewlett-Packard and Cisco Systems, along with a handful of start-ups, are also rolling out devices capable of streaming content from home computers.

Apple is hoping that its set-top box will be able to transform the market for internet television in much the same way that its iPod music player transformed the market for digital music. Like the iPod, Apple TV will rely on iTunes music store for downloads of films and TV shows.

“Apple’s offering is an end-to-end solution,” said Michael Gartenberg. “ITunes is really becoming a platform for other devices.”

Wall Street expects Apple to capture a quarter of the digital living room market, according to Gene Munster, an analyst at Piper Jaffray. He says that market could grow to $4.8bn by 2008.

Not everyone is convinced that Apple TV will succeed. Josh Bernoff, an analyst at Forrester Research, said the limited selection of films available for download through iTunes could limit the device’s appeal. “[Microsoft is] way better positioned to succeed [in the internet TV market].”

Apple’s shares rose 0.5 per cent on Tuesday to $91.61 by midday in New York.