It's clear that Apple has in the crosshairs not only Microsoft and the numerous PC vendors that ship computers with Microsoft's Windows XP Media Center Edition operating system but also digital media players such as Cinemanow, Movielink, Vongo and Amazon's Unbox.  Rental services such as NetFlix and Blockbuster are also a target.  The battle is clearly on the living room.  By the first quarter of 2007, Apple will have in it's arsenal a full product lineup that will allow the company to capitalize on it's growing popularity but more importantly, the ability to deliver an across the spectrum digital experience to its customers.  Consumers will soon be able to leverage Apple products and technologies for all facets of their digital lifestyle from computers and portable music players to devices that can take the experience to the living room.

The iPod revisions are a strategic play as they have been released well in advance of the 2006 holiday buying season.  This will allow Apple to scale production and stuff it's distribution channels to meet demand.  I expect sales of the new iPods to be strong due to the lower price points, the enhanced specifications, and added software features.  I expect that consumers will be quick to embrace the new iPods over competitor products such as Microsoft's upcoming Zune.  Apple will experience a reversal of the recent iPod sale declines from the past two quarters.

I also expect to see a strengthening of the "Halo Effect", the term used to explain that the popularity and strong sale of iPods to Windows PC users eventually translates into increased Macintosh computer sales as a result of people making the switch.  Call it the "Halo Effect" or whatever catchy phrase you want.  The end result will be the same, more people will make the switch to a Mac.  I maintain the position that 2007 will be a historical year for Apple.  I'd like to call out my April 2006 prediction (scroll down to section "Market Share Impact and More Switchers") that Apple will have an 8 percent market share in the personal computer market by the end of the OS X 10.5 Leopard lifecycle.  The launch of the iTV device will add fuel to Apple's popularity, success, and adoption.  Furthermore, it's only a matter of time before Apple announces iPods that embrace technologies such as touch screens, wireless, and larger screens.

We can only speculate what Apple has planned for future products and technologies.  I'd take the bet that Apple has plans to extend the Apple brand into many more areas of our lives.  Rumors are that Apple's next move will be a mobile phone (iPhone?).  Regardless, the announcements at the September 12, 2006 "It's Showtime" event provide further insight into Apple's digital entertainment vision and strategy.  Apple has taken the next step to entrench their products into our everyday lives.  The ubiquity of the Apple brand continues to take shape.