Apparently I'm not a dope after all.

As anticipated in last week's column, Apple's special event came and went this Tuesday and with the exception of the two HDTV models I predicted, it went the way I said it would. And those big screens are likely still coming before the Christmas season, just as Apple launched three new iMacs last week without putting Steve Jobs onstage.

But now let's put this week's Apple event in some context and understand what it is and isn't, because there is a lot happening here. It generally comes down to a word we used to use all the time but haven't much since the Internet crash of 2001 -- disintermediation.

The 1990s Super Bowl-advertising dot-coms were all about disintermediation, which meant cutting out the middlemen and splitting with the consumer what would otherwise have been the revenue of those disintermediated sales organizations. It worked fine in some industries, like travel, where traditional travel agents died en masse. It worked for Amazon.com. But it didn't work at all in cases where the deliverable was in the form of electrons (that was the ideal, remember, a non-physical sale). So many transactions required too many electrons that the miniscule bandwidth of that era bandwidth made the experience unsatisfying for all parties. (Remember the Victoria's Secret Internet fashion show on Broadcast.com?) Only recently has there been consistently enough bandwidth to make media delivery practical, for example, which is what this Apple announcement was all about and part of why it took so long to happen.

What I want to do here is to compare Apple's position with Microsoft's and Google's or Yahoo's. Microsoft, with its Media Center PC, isn't "disintermediating" anyone. Now in its third unsuccessful generation, the Media Center PC is a $1,000 TiVo box intended mainly to capture, store, and replay broadcast and cable TV. Microsoft has been unwilling to take the side of either the producer or distributor, and that very unwillingness has been its undoing.

Notice that the Apple announcement said nothing, really, about broadcast or cable TV. iTunes carries 220 TV series from 40 networks, Steve Jobs said repeatedly, but the actual television experience -- commercials and all -- isn't replicated in any sense by the shows that are downloaded from Apple. It is a strictly retail experience: you pays your money and you takes your choice. We're not bending the cable operators to our will, we are simply ignoring them. But what might have been the cable company's piece of the action can now be shared between the producer and the viewer, with a cut for Apple of course. Apple has taken a side and that's the side of the producers, not the historic distributors.

There is something simple and sweet about such a commercial relationship, which is at the center of the Net Neutrality issues we've discussed from time to time, except that by embracing downloading, Apple has effectively neutered the effects of Net Neutrality proponents. It simply doesn't matter.

Contrast this with Google or Yahoo and even with Microsoft in recent years when everything seemed to be moving to being ad-supported. Where is advertising in Apple's strategy? It is nowhere to be found.

By selling outright, Apple doesn't need ad sales to succeed, reducing its risk. It also reduces downloads, I am sure, but that's not all bad. Even if the system were heroically successful right from the start, it might have technical problems. By ramping slowly with retail sales only, Apple can hope to keep ahead of the demand curve.

Just as Apple isn't Microsoft relying on working with the TV networks and cable channels, Apple isn't dependent on advertising, either. PVR (personal video recorder) functionality and advertising can easily be added at a later date if that is justified by market conditions or revenue expectations. Yet for Microsoft or Google going the other way -- from free with ads to paid -- it is that much harder a task.

When Apple needs more revenue from its movie business it can always add commercials. When Apple needs more revenue from its hardware products, it can always sell a PVR upgrade for $99. The ongoing profit potential is immense.

But what's the chicken here and what's the egg? Is Apple selling iPods to sell music, for example, or selling music to sell iPods? It is most decidedly the latter. Based on a claimed 1.5 billion song sales at $0.99 each, Apple has made gross revenue from music sales of just under $1.5 billion since 2001. Yet in the same time period the company claims to have sold 60 million iPods, which represent (at an average $200 price) $12 BILLION, or EIGHT TIMES as much revenue. So the game is about selling razors, not blades, at least not yet.

Keep that in mind for a moment.

Whatever happened to the Year of HD that Apple declared at MacWorld in January 2005? In reviewing this week's webcast, I don't recall once hearing the terms "HDTV" or "High Definition." What changed?

Apple deliberately repositioned its movie offerings to be better than broadcast quality but less than DVD quality and quite a bit less than HD-quality. Doing so saves on bandwidth (though less than you'd guess -- moving NerdTV from 320-by-240 MPEG-4 to 720-by-480 H.264 increases the required bandwidth by only about a factor of two, the new codec is so much more efficient), but it is also politically expedient when thinking about Wal-Mart, Best Buy, and Target -- the three largest sellers of DVDs and, not at all coincidentally, the three largest sellers of iPods, too.

By increasing its video resolution only to a point, Apple can tell these retailers that it isn't going to hurt their sales very much. And with the eventual migration to Blu-ray and HD-DVD, there will be an even clearer differentiation between the iTunes product and Blockbuster or Wal-Mart.

But Blu-ray and HD-DVD are both deploying slowly and there's a risk that they'll destroy each other with market confusion, so then what? Then the iPod, that's what. Apple can present to its studio buddies the idea that iPods are perfectly good movie containers. Remember the same H.264 movie plays on your iPod or your TV, meaning the iPod carries the same code, making it a viable HD-DVD or Blu-Ray equivalent. Why else would you need an 80-gig iPod?

So for the moment Apple tells Wal-Mart that movies sold through the iTunes Store won't be a threat because of their lower than DVD resolution. When that fails, Apple will point out that HD-DVD and Blu-ray are coming and Wal-Mart should stop worrying. But eventually Apple will succumb to its need to sell yet more iPods and will point out that its little gizmo is a fine substitute for an optical disc. Take your iPod to Target and fill it with movies. Or, better still, buy an iPod at Target and THEN fill it with movies. Remember that in the end this is all about selling more razors, not more blades, so movie sales don't really matter much to Apple as long as iPods are flying off the shelves.

It is a brilliant and finely honed strategy that first targets the cable companies everyone loves to hate, identifies with the studios and calms them, calms Wal-Mart and Target, too, then eventually offers in the iPod an ultimate video container that can be filled over the Net or at a store.

And what makes it really compelling is the iTV gizmo, which I have been calling the Video Express. This device, with its High-Definition Multimedia Interface (HDMI) and component video outputs is clearly aimed at HDTVs, despite Apple's decision FOR NOW not to embrace HDTV output. Its form factor sits perfectly atop a Mac Mini, which Apple has always seen internally as a consumer electronic device, not a computer. Its price point at $299 seems high to some, but it is based on early adopter VCR and DVD and current media extender pricing and definitely will come down over time. Jobs was vague about the wireless network the iTV will use, but it is clearly some form of MIMO (multiple-input multiple-output) or 802.11n, which would be needed for the range and speed. Compare the form factor, for example, to Netgear's pre-N MIMO router, which could well be what's inside. Apple will sell a ton of these and then will build this functionality into their HDTVs, which will be what differentiates them from the other guys.

What makes the iTV (Video Express) better than my MediaMVP is the codec, the software, the seamless user interface. That's what nearly always differentiates Apple products and is responsible for their success. It isn't technology so much as user interface design.

Yeah, but how can iTunes compete in the marketplace with essentially one participating movie studio? Where are all those other movie studio deals like Amazon has? Amazon's service is hobbled compared to Apple's. Read the reviews. When Disney starts showing significant movie revenue from iTunes, the other studios will quickly come around. Money talks.