Apple launches Web movie rentals, thin laptop

By Scott Hillis

SAN FRANCISCO (Reuters) - Apple Inc (AAPL.O: Quote, Profile, Research, Stock Buzz) unveiled a lightweight laptop about three-quarters of an inch thick on Tuesday and said it would rent movies over the Web, moving the iPod maker into a very competitive market.

Shares of DVD rental rival Netflix Inc (NFLX.O: Quote, Profile, Research, Stock Buzz) fell 2.5 percent to $22.20 and Blockbuster Inc (BBI.N: Quote, Profile, Research, Stock Buzz), the largest video rental chain, dropped 16 percent to $2.72.

But Apple shares also fell, by more than 6 percent to $167.64 in afternoon trading, as investors had expected both developments after widespread speculation.

"There wasn't the 'wow' factor from anything that Apple had to say today," said Michael James, senior trader at regional investment bank Wedbush Morgan in Los Angeles.

Chief Executive Steve Jobs made the announcements at the annual Macworld convention in San Francisco, where last year he showed off the highly anticipated iPhone for the first time, setting a high bar for this year's event.

Apple shares have nearly doubled since last year's Macworld, and in late December topped $200 for the first time.

Jobs said the new aluminum-skinned MacBook Air notebook was the thinnest computer available, at a maximum of 0.76 inches and tapering to just 0.16 inches.

Priced from about $1,800, the MacBook Air bridges the gap between Apple's entry-level and high-end laptops, and analysts voiced concern that it could steal customers away from its more expensive products.