The iPod has "been a huge hit for us, so it's time to replace it," Apple CEO Steve Jobs said as he showed off the new video-capable MP3 player at an event in San Jose, California. "Yes, it does video."
The music players, which come in black or white with a 2.5-inch screen, will be available in a 30GB model for US$299 and a 60GB version for US$399. The new devices hold up to 15,000 songs, 25,000 photos or more than 150 hours of video, Apple said.
Jobs kicked off the event by revealing a new iMac G5 desktop computer that will be similar to the current model but thinner. The 17-inch 1.9GHz goes for $1,299; the 20-inch 2.1GHz model is $1,699. The iMacs will have a built-in, Webcam style iSight camera with still and video capabilities, and a new bundled Apple remote that lets consumers watch music, photos and video from 30 feet away.
At the gathering, Jobs used the tiny white remote control like an oversize iPod Shuffle to play a Black Eyed Peas video and an "Incredibles" DVD and also to play home movies and photos.
The new lineup of features for iMac and iPod point the company at last more directly at the living room space that Microsoft has attempted to carve out with its Media Centre edition of Windows. Jobs introduced the new remote control and Front Row multimedia functions of the iMac, saying that it would allow people to experience music, video and photos "from the sofa."
For now, the differences between the two platforms remain striking, however. Media Centre PCs plug directly into a television or a television input device such as a cable TV box. That allows the devices to record television shows much like a TiVo device, for example.
Many of today's Macs (and the new iPod) have a TV-out connection, but not a a TV-in connection. Jobs highlighted only the ability to watch video on the iMac and iPod, without mentioning watching the programming on a television at all.
Indeed, for now, the video highlighted by Jobs is best suited for small screens, although Apple's software enhances the quality significantly for watching on a large screen. The 320-by-240 resolution can be expanded to watch on a full-screen LCD (liquid-crystal display) TV or computer monitor, but it will not have the quality of a DVD.
The cost of content
Then there's cost. With the new version of iTunes, unveiled just five weeks after the debut of iTunes 5, American consumers can buy non-burnable music videos for US$1.99.
Tim Deal, an analyst with Technology Business Research, said he's unsure how consumers would take to the per-video cost.
"While I can appreciate the cool factor of portable video content, the price is a little difficult to digest," he said. "I think consumers are accustomed to seeing music videos for free from services such as Yahoo Launch and Comcast On Demand. Apple should give the videos away and charge for exclusive content only.
"This will, however," he added, "be a real boon for video podcasting and provides another distribution channel for independent content."
In addition to music videos, consumers will be able to purchase TV shows one day after their initial broadcast. Offerings will include ABC television's "Lost" and "Desperate Housewives" and the Disney Channel's "That's So Raven." It will take 10 to 20 minutes to download an episode, Jobs said. Each will cost US$1.99 and will be ad-free.
Disney chief executive officer Robert Iger took the stage with Jobs to introduce the sales of Disney- and ABC-owned TV shows through iTunes.
"We believe this is a breakthrough," Iger said. "This provides a great opportunity for consumers to stay connected to their favorite programs."
Six short films from Pixar Animation Studios will also be available for US$1.99 each.
Apple last week sent out invitations that included the words "One more thing..." Wednesday's announcements took place at the California Theatre, where Apple introduced the U2 iPod and the first colour-screen iPod Photo last year.
The video iPod arrives just one month after Apple unveiled its pencil-thin iPod Nano. Company executives said on Tuesday that demand for the Nano is strongly outstripping Apple's ability to supply the flash-memory-based music players.
Still a music machine
While highlighting the new iPod's video features, Jobs appeared careful to stress several times that it was still fundamentally a music-playing device, with video features added as a "bonus."
The careful language may have been aimed at avoiding a repeat of the introduction of the Photo edition of the iPod, which was not initially a top seller despite the addition of the colour screen and photo features.
However, Jobs did show off a new iPod ad that focuses wholly on the new video features, with a tagline "Watch your music."
Sam Bhavnani, an analyst at Current Analysis, noted that the appeal of video is more limited than music. "You can't use it when running. You can't use it while working. You can't use it while driving," he said. However, downloading a TV show to use on an airplane flight, for example, will appeal to some consumers.
Apple "did a small step," Bhavnani said. "It doesn't take Einstein to know the next step is more shows. Maybe ultimately you get to where the next 'Toy Story' is going to be downloaded through iTunes."
Apple's video device isn't the first to hit the market. Studios currently market a handheld computer called the Type U in Japan that can be used to watch videos. Consumers also can watch movies (with a tiny Universal Media Disc) on the PlayStation Portable.
Intel and Microsoft designed a portable media player back in 2002 that some manufacturers brought to market last year. (First it was known as Media2Go and later as the Portable Media Centre.) In addition, Samsung and others have released phones that can receive TV signals, thereby allowing commuters to watch shows on their cell phones.
So far, though, portable video hasn't been a big seller. The screens on these devices are far smaller than those on TVs. Video also can sap battery life. Watching TV over cellular signals, some Korean consumers have found out, can rack up bills. (New versions of the cell phone televisions use a TV tuner card, rather than deliver TV over the cellular network.)
Sony executives, though, recently said that sales of Universal Media Disc movies for the PSP are a little better than expected.
CNET News.com's Michael Kanellos contributed to this report.
