• Los Angeles Times, Wednesday, September 13, 2006 12:04 PM

With Microsoft poised to announce an iPod challenger called Zune this week, Apple CEO Steve Jobs yesterday shifted the battlefield. As expected, Jobs announced a deal with Disney to offer its movies for downloading over the Internet. But he also unveiled plans to produce a device tentatively dubbed iTV, which will display movies, television shows and other videos purchased online on TV sets. Making TVs and personal computers work better together is seen as the key step toward the broad online distribution of movies and TV shows, although iTV will not be available until early next year. By showing his hand, Jobs was also borrowing a time-honored Microsoft trick: inhibiting purchases from rivals by announcing a product that won't reach stores for months. Apple will sell its set-top box for $299, using a wireless home network to fetch the downloaded movies, TV shows or other video content from the computer and display it on the TV. Although analysts do not believe that Zune will seriously challenge iPod's market dominance, Sony learned a lesson in the video-game console market. Its PlayStation2 controlled half the market five years ago, but Microsoft's Xbox 360 is now the industry leader in next-generation consoles.

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