BANGALORE, INDIA: As expected, Apple has launched Apple TV 2.0 as a $99 unit almost a quarter of the size of the first generation device, first launched in 2007.

The service strategy behind this stripped down unit is in marked contrast to the approach to the broadcast industry being taken by Google. Apple is just looking for a share of VOD revenues.

Also Read: Amazon trying to create Web-based TV service

With the launch of Apple TV 2.0 Apple has shown a strong focus on the VOD market, a different strategy to that being pursued by Google TV. 

Google wants a share of this market, but also the much larger broadcast advertising market.

However the strategic subtext to Apple’s announcement last night was AirPlay, Apple’s new name for its proprietary WLAN media streaming application.

This is a major feature of the coming operating system updates for its iDevices and will allow users to stream music, photos and video content from an iPad, iPhone or iPod Touch direct to the TV set.

This turns the TV screen into a companion accessory to socially share content from devices that are otherwise highly personal. Rather than place another computer underneath the TV, Apple is seeking to leverage the computing power, network effect, and potentially, the App Store distribution channel of its 120 million iDevices.

If it is successful it can move on the mainstream broadcast market that Google is targeting. It faces very serious, entrenched competition from existing pay-TV, consumer electronics and evolving free to air broadcast players, but it would be unwise for any of Apple’s competitors to dismiss the iDevice network effect.

The author is lead media, broadcast and telecoms analyst, Ovum.