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Tuesday, November 14, 2006
Apple deals help iPod videos play on planes

Airline passengers will be able to connect their iPods to in-flight entertainment systems and watch their favorite videos without fear of running out of battery power while traveling on any of at least four major carriers, Apple said on Tuesday.

Continental Airlines , Delta Air Lines , Dubai's Emirates , and UAL Corp.'s United Airlines will begin offering their passengers iPod seat connections, which power and charge iPods during flight and allow the video content on the devices to be viewed on seat-back displays.

Apple has sought to expand the possible uses for its market-dominating iPod, including deals to build iPod ports into new-model cars. The announcement came as rival Microsoft Corp. launched its Zune digital music player on Tuesday in a bid to challenge the iPod.

Apple said in its statement that Air France and KLM were also part of the agreement. However, those two airlines said it was premature to be definitive.

"It's way too early to confirm any such details," said an Air France spokeswoman, referring to the iPod seat connectivity and a mid-2007 availability date.

"It's very premature what Apple are saying," said a KLM spokesman, noting that there have been "informal contacts" between Apple and the airline. "We have no idea if this is technically feasible, if it's financially viable, or it customers want it," he said. "At this moment, we have absolutely no intention of introducing it on board."

Apple spokesman Tom Neumayr said: "Clearly we have had a miscommunication with AirFrance-KLM, but we are excited about announcing iPod integration with in-flight entertainment systems on Continental, Delta, Emirates and United today."

Service at participating airlines will begin in the middle of next year, Apple said. Other terms of deals were not disclosed. All airlines are "looking to upgrade their entertainment systems, especially for longer distance flights," said Ray Neidl, senior airline analyst at Calyon Securities. "This is just one way of doing it."

While many travelers now use laptop computers or portable DVDs players to watch videos, those devices have limited battery life. To date, Apple has sold nearly 70 million iPods and more than 1.5 billion songs through its iTunes music store. It has also made popular TV shows and movies available for purchase and download through its Internet store.

But with more than 75 percent of the U.S. market for digital music players, analysts have voiced concern that there is limited room for growth in iPod's market share. Apple has responded by introducing new versions of the device, including a new video iPod and iPod Shuffle. By striking deals to have iPod outlets in cars and now airlines, the computer maker is also expanding the uses of its hugely popular music and video system.

At the same time, airlines are searching for ways to keep customers loyal, even as many cut back on services such as meals to control costs. Apple is working on bringing the iPod service to other airlines, it said. In a statement, United said that the deal is part of its broader plan to upgrade international first- and business-class travel.

"There is significant value in offering a superior in-flight entertainment experience to our first- and business-class customers during their international flights," said Graham Atkinson, executive vice president and chief customer officer. Calyon's Neidl said he believed Apple and other airlines would soon announce similar deals. "It's a nice add-on, makes customers happier, keeps them out of flight attendants' hair," he said.

Apple shares closed up 65 cents at $85.00 on the Nasdaq.

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