Apple's Jobs introduces video iPod

SAN JOSE, Calif. – Apple Computer Inc. unveiled today an iPod capable of playing videos, evolving the portable music player of choice into a multimedia platform for everything from TV shows to music videos.

Videos will now be sold online alongside songs on Apple's iTunes Music Store.

Citing a groundbreaking deal with ABC Television Group, Apple chief executive Steve Jobs said the online iTunes store will sell episodes of hit shows "Desperate Housewives" and "Lost" for $1.99 each, making them available the day after they air on television for viewing on the new iPod's 2.5-inch color screen.

Analysts consider Apple's much-anticipated introduction of a video iPod a test of whether consumers would embrace video on such a small screen. Over-the-air TV services are already available for cell phones but the quality remains substandard.

"It's never been done before, where you could buy hit TV shows and buy them online the day after they're shown," said Jobs whose other company, Pixar Animation Studios Inc., has a long relationship with ABC's parent, The Walt Disney Co.

Competing portable video players have been available for several years but very little compelling content has been available, and Apple's move comes amid fledgling initiatives to offer original video programming on the Internet.

"This is the first giant step to making more content available to more people online," said Robert Iger, Disney's chief executive. "It is the future as far as I'm concerned. It's a great marriage between content and technology and I'm thrilled about it."

The new video iPod, available in black or white, will be able to play video and podcasts. A 30-gigabyte version will sell for $299 and a 60-gigabyte, $399. Extra features on both versions include a clock, a calendar that Jobs said never looked better, a stop watch and a screen lock.

"It's really very beautiful and very thin," Jobs told assembled journalists and guests.

The video iPod will lock TV shows and music videos downloaded from the iTunes store with copy-protection software, just as Apple does for music. But it will also support the MPEG-4 video standard, meaning users could view home movies and other unencrypted videos on it.

Apple has been riding high on the success of its iPods, which helped quadruple the company's profits last quarter.

In the last fiscal quarter, the iPod accounted for nearly a third of Apple's revenue; Macintosh computers, Apple's historical core product, accounted for about 44 percent with 1.2 million units sold.

Today, Apple also introduced newer, thinner models of the all-in-one iMac desktop computer.

Apple shares fell $2.71, or 5.3 percent, to $48.88 in Tuesday afternoon trading on the New York Stock Exchange. The shares' 52-week low was $18.83 on Dec. 12, 2004.

Susan Kevorkian, an analyst with research firm IDC, said she expected Apple to increase the screen size of the video iPod in future generations of the product.

"This will tell us a lot about whether their consumers will be comfortable watching longer-format programming on a small screen," she said.