By Philip Elmer-DeWitt
September 1, 2010

Once again, Steve Jobs has managed to stir up a frenzy of anticipation

For an event that is ostensibly about music and the iPod — the only part of Apple’s (AAPL) expanding product portfolio that is actually shrinking — the press conference scheduled for 10 a.m. PDT (1 p.m. EDT) Wednesday is getting more than its share of media attention. A Google News search early Wednesday for “Apple event” turned up more than 1,100 stories.

It didn’t hurt that Apple waited until the last minute — 7 p.m. Tuesday evening — to announce that it would be streaming video of the event live over the Web, reviving a tradition of simulcasting Steve Jobs’ keynotes that ended in 2005 when Apple could no longer handle the huge demand for bandwidth the simulcasts created. Tuesday’s announcement immediately triggered speculation that the company was using the event to showcase the capacity of the giant server farm it’s been constructing in North Carolina.

But the real reason so many people are tuning in is that Apple has managed to transform the iPod and iTunes — originally a digital music player and an online music store — into something much bigger.

With the iPod touch, Apple linked the iPod family to the iPhone, giving it the same touch screen, the same operating system (iOS) and the same access to the more than 250,000 applications in the App Store. If, as rumored, the next iPod touch will have a front-facing camera like the iPhone 4, that would enable its users to engage in Facetime video chats. Apple’s hope is that if enough people use it, the Facetime protocol will become the basis on which all video phone calls are made

Meanwhile, iTunes has vastly expanded its portfolio. In addition to serving up billions of songs (10 billion as of February), it also offers 150,000 podcasts, 20,000 audio books, 75,000 college course files, and thousands of radio stations.

More important, over 2 million feature-length films and more than 200 million TV episodes have been purchased through iTunes.

Steve Jobs may still view Apple TV as a “hobby,” but with more than 125 million customer credit cards on file, he has become a force to reckon with in Hollywood. Apple is said to be readying a new version of Apple TV at a price ($99) that would make it a considerably more affordable. It’s been widely reported that the company is negotiating with the big TV studios for the right to rent their shows on iTunes for 99-cents each, and on Tuesday
Bloomberg Businessweek
reported that Apple had cut a deal with Netflix to add a movie subscription service to the mix.

There’s nothing like a frenzy of activity in their own back yard to catch the attention of the media. The satellite trucks Tuesday afternoon were already starting to line up outside San Francisco’s Yerba Buena Center for the Arts, the event’s venue. The live broadcast will be streamed through starting at 10 a.m. PDT. We’ll be there too, offering blow-by-blow coverage and commentary.

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[Follow Philip Elmer-DeWitt on Twitter @philiped]

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