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Looking to watch the latest episode of your favorite TV show? Apple wants to rent it to you. Yesterday, the Mountain View-based company unveiled the latest incarnation of Apple TV. And like most of Apple's newest consumer electronics devices, behind the hardware is a business model to move content.

In addition to $4.99 high-definition movie rentals, Apple TV offers up 99 cent rentals of popular television shows from Fox and ABC. But will Apple TV do for television shows what the iPod and iTunes did for music? That may depend on how Apple deals with the competition. If the counter attack Amazon has already launched is any indication, the competition may be pretty fierce.

Amazon, of course, also competes with Amazon in the digital music space. And it has actively been looking to get a big piece of the action as the digital content wars extend into the realm of the big and small screens. The Amazon On Demand offering already gives consumers the ability to watch movies and television shows through a computer or one of the devices, such as the Roku player, that come bundled with the Amazon on Demand software.

Apple TV is a potential threat to Amazon on Demand, and many of the devices that come with Amazon on Demand. But right around the time Apple was announcing 99 cent rentals of Fox and ABC television shows, Amazon was unleashing a surprise of its own: 99 cent purchases of shows from ABC, Fox and the BBC. While it appears that Amazon may have cut into its own margins to bring pricing down to this 99 cent level, Amazon is clearly hoping consumers will ask a simple question: why rent when, for the same price, I can own?

If it can get enough of them to ask that question, it may find that it has more success competing against Apple in this market than it arguably has had in competing with Apple in the digital music space. One thing Amazon has going for it: Apple doesn't have a huge head start. When Amazon launched MP3 sales, for instance, Apple, thanks to the potent combination of iPod and iTunes, was already the 800 pound gorilla of digital music.

Additionally, Amazon may benefit from the fact that consumers already have quite a bit of choice. Companies like Roku and Boxee may not have anywhere near the brand recognition Apple does, but that doesn't mean their products aren't compelling, especially when compared to Apple TV. Bottom line: Apple TV doesn't appear to be revolutionary. That’s one reason Apple will arguably find greater competition for Apple TV than with any other device and content offering it has launched previously.

That, of course, doesn't mean that Apple won't succeed. After all, Apple's brand is everything and Apple TV may not need to be revolutionary. But Amazon is already fighting back, and I'm sure others will too. This means Apple just might face a level of competition it's not used to. And that is probably going to be a good thing for everyone, Apple included.

Patricio Robles

Published 2 September, 2010 by Patricio Robles

Patricio Robles is a tech reporter at Econsultancy. Follow him on Twitter.

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