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 here. "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 $299 and a 60GB version for $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 come with a built-in, Webcam-style iSight camera with still and video capabilities, and a new Apple remote that lets consumers control 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 finally point the company more directly at the living-room space that Microsoft has attempted to carve out with its Media Center edition of Windows. Jobs introduced the iMac's new remote control and multimedia functions, called Front Row, saying they would enable people to experience music, video and photos "from the sofa."
However, the differences between the two platforms remain striking. Media Center PCs plug directly into a television or a television input device such as a cable TV box, allowing the devices to record television shows much like a TiVo digital video recorder, for example.
Many of today's Macs (and the new iPod) have a TV-out connection, but not 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.
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 for a full-screen LCD (liquid-crystal display) TV or computer monitor, but will not have the quality of a DVD.
The cost of content
Then there's cost. With the new version of iTunes, unveiled five weeks after the , consumers can buy non-burnable music videos for $1.99.
Tim Deal, an analyst with Technology Business Research, said he's unsure how consumers will 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," Deal 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 $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 also will be available for $1.99 each.
Apple last week sent 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 firstlast year.
The video iPod arrives just one month after Apple unveiled its. Company executives said Tuesday that demand for the 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 color screen and photo features.
However, Jobs did show a new iPod ad, focused wholly on the new video features, with the 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 athat can be used to watch videos. Consumers can also watch movies (with a tiny Universal Media Disc) on the PlayStation Portable.
Intel and Microsoft designed a portable media player in 2002 that some manufacturers brought to market last year. (First it was known as Media2Go and later as the Portable Media Center.) In addition, Samsung and others have released, 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 high 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 sales of Universal Media Disc movies for the PSP .
CNET News.com's Michael Kanellos contributed to this report.