I’ve been saying for a long time now that I thought Apple’s single biggest mistake with regards to the movie portion of the iTunes video store is that they miscalculated what customers want when it comes to digital movies. Sure, some great movies people want to buy – and they do – but there are many more not-so-great movie out there, and many more people who have no desire to buy those – but they will rent them.

Apple, it would seem was blinded by Steve Jobs correct assertion that people want to own their digital music rather then ‘rent’ or subscribe to it. Not every industry is the same however, songs are a few minutes long, movies are anywhere from 90 minutes to 3-plus hours long – it’s a much larger investment in time and in money, and as such people most people are only willing to buy what the really love, not just a catchy song they heard, or something they think they may like because iTunes recommended it.

Microsoft spoke of similar findings via research they’ve done for the Xbox 360 – which has a movie rental system via Xbox Live. They indicated that their audience wants to rent digitally and if they want to buy, they do so on physical media such as DVD. While ultimately having the option to either rent or buy (or better yet rent first, then buy at a discount if you like!) would be the best answer, in the meantime I think it’s pretty clear that having a solid digital rental service in place is more important that a buy-to-own store at this point.

Louisgray and Webomatica are just as convinced of this as myself.

Yes some of it has to do with storage. Digital films – especially those in hi-def – take up a lot of space on a hard drive, and even though hard drives keep getting bigger and prices keep going down, the transition that is already starting to happen to solid state storage threatens to slow this trend. Imagine dropping $1,000 for a 64 GB solid state drive that you can only store 5-10 movies on.

A much larger factor is simply that without the option to rent on a service like iTunes, I’m forced decide whether Freedom Writers is really something I’m going really feel the need to own 5 years from now (taking up valuable space on my hard drive). I’d rent it, but I have absolutely no desire to own it – and so I opt to use something like Netflix or Blockbuster instead of iTunes. Apple made a major miscalculation here.

It seems a foregone conclusion now that Apple has realized its mistake and that an iTunes Rental Store is coming, but they need to be quick about it. While they’ve been lollygagging the past year and change, Microsoft actually did its homework.