By Jeremy Scott-Joynt Business reporter, BBC News

The new iTV device is due out early next year The future for Apple

The company has unveiled a device which will stream music and video wirelessly between televisions and computers.

The plug-in hardware is due to be released early next year and has been given the temporary name of iTV.

As well as announcing updates of its best-selling iPod music players, Apple also launched a new service allowing users to download films.

The move into movies was widely predicted by observers, and follows a similar launch by online retailer Amazon.

Deals have been done with Pixar, Touchstone, and Miramax, who are all subsidiaries of Disney - where Apple's chief executive Steve Jobs is also a director.

Living rooms

The new box - about the size of three stacked CD cases and selling for $299 (£160) - is intended to plug the final connection between computer systems and home entertainment.

Pretty much whatever kind of setup you've got, iTV fits in Steve Jobs CEO, Apple Euro debut for iTunes challenger Check Apple's share price Send us your comments

For some time Microsoft has sold "Media Center" PCs, which are intended to sit in living rooms.

But the machines have failed to reach critical mass.

Although several devices exist to pipe satellite and cable TV to computers, it has so far proved difficult to persuade users to make the connection in the opposite direction.

Apple's system is intended to make that easier, for both PC and Mac users.

Stored music can also be piped to stereo systems and controlled via the TV.

"Pretty much whatever kind of setup you've got, iTV fits in," Mr Jobs said.

"Now, you can get great content online. It's playing now on a computer near you. You can play it on an iPod near you and it is coming to a TV near you."

'Competition'

The system could prove a challenge not only for other computer makers - but for broadband firms too, said senior analyst Ian Fogg from Jupiter Research.

By announcing iTV well in advance of its release Apple is building momentum as it seeks deals with more movie studios Ian Fogg Analyst, Jupiter Research

"Broadband could become a trojan horse that enables companies like Apple to compete with cable TV companies and DSL providers that want to offer TV as well," he said.

"Companies like NTL have an existing TV business, which is facing new competition. BT has a plan for TV and Sky has moved into broadband too.

"If Apple can deliver movies and TV easily, then that could be a big problem for them.

"By announcing iTV well in advance of its release, something the firm rarely does, Apple is building momentum as it seeks deals with more movie studios."

Films for download

Apple's move into movie downloads - priced at a minimum of $12.99 (£6.93) for new releases and $9.99 for older films - comes several days after Amazon's launch of its own system, Unbox, which is not compatible with either Macs or iPods.

In a presentation in San Francisco, Apple chief executive officer Steve Jobs said the films would be sold at "near-DVD quality".

It was unclear whether - as is still the case with TV downloads - films would be available only to US customers.

The unveiling of new products was highly anticipated

The firm also introduced new, larger-capacity versions of its iPod music players.

The iPod nano, its middle-sized machine, is to get a new aluminium case, an upper size of 8 gigabytes (GB) and longer battery life.

Many users have complained that the first-generation Nano scratched too easily.

For the main iPod player, Mr Jobs said it had improved the brightness of the screen and cut the price to $249 for 30GB and $349 for the new 80GB model.

It also added several new games, including Tetris, Pacman and Texas Hold 'em poker - for download at a cost of $4.99 each.

Both iPods have longer battery life and quicker searching of their song archives, Apple said.

And the Shuffle, Apple's smallest - and screenless - music player, has been shrunk to less than a third the size of a credit card at a price of $79 for 1GB.

iTunes update

At the same time, Apple announced updates to the company's online music and video store, iTunes.

The firm said users of the iTunes music store would automatically download graphics of album covers for music ripped from CDs, allowing them to search through animations of album art as well as by name lists.

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The switchover means all Macs can now run Windows as well as the Mac's own OS X operating system, a factor which some analysts say has helped sales.

The same system, Mr Jobs said, would allow easy searching of TV shows and movies downloaded.

All video would now be delivered at TV quality, Mr Jobs said, and would allow automatic recording of seasons of TV.

Mr Jobs said programmes and music bought online could easily be transferred between machines - a long-standing niggle for iTunes users.

Reputation

Apple's announcements come after a year in which the firm has swapped all its computers over to Intel microchips.

But the firm has run into occasional quality problems, while the firm's reputation has taken something of a hit thanks to a battery recall - also suffered by PC maker Dell - and an ongoing investigation into the stock options it awarded some executives.