Apple Unveils Video iPod

Apple Computer Inc. unveiled an iPod on Wednesday that can play videos and television shows, the latest creation in its ever-evolving and hugely popular line of portable music players.

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 apiece, making them available the day after they air on television.

"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 The Walt Disney Co., which owns ABC.

"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."

"It's not 100 percent clear who will want to watch video on a hand held device," says CBS News Tech Guru Larry Magid. "But because they're replacing the old iPods at the same price point, people won't have to think about it. If they liked the old iPod, they'll like the new ones even better."

The 30-gigabyte version of the new video iPod, available in black or white, 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 said at the much anticipated news conference.

Magid notes, "In theory, the device could also be used to watch full-length movies. Question is, who wants to watch a movie on a 2-½ inch screen?"

Apple has been riding high on the success of its iPods, which helped quadruple the company's profits last quarter and nearly triple its stock from its 52-week low in December.

Overall shipments of iPods, however, fell shy of Wall Street's high hopes.

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.

On Wednesday, Apple also introduced newer, thinner models of the all-in-one iMac laptop.