Apple Introduces Video iPod

By Duncan Martell SAN JOSE (Reuters) - Apple Computer Inc. on Wednesday introduced a version of its market-leading iPod that also plays videos and unveiled a deal with Walt Disney Co. to sell television shows like "Desperate Housewives" after their first broadcast. Apple has long aimed to make its devices the hub for digital entertainment inside and outside the home, and Chief Executive Steve Jobs said the ABC deal was a turning point in bringing television to the Web. "I think this is really pretty big and I think it's just the beginning," Jobs said in an interview.

The video iPod -- a long-rumored product that could further spark sales of the popular brand -- has a 2.5-inch screen and comes with 30 or 60 gigabytes of memory. The sleeker, thinner version will sell for $299 and $399, respectively, and holds up to 150 hours of video. As part of its deal with Disney's ABC network, iPod users will be able to download five shows including ABC's "Desperate Housewives" and "Lost." Current-season episodes of the series will be made available at the iTunes music store the day after broadcast. The entire first season of "Desperate Housewives" and "Lost" will be available immediately. The television shows are only available in the United States and cost $1.99 per episode, without commercials. Media companies and computer companies have traditionally been at odds over bringing entertainment to the Web, given rampant piracy of music online, and Disney and Apple said their deal was a watershed. "This is the first giant step in terms of making content available to more people in more places," said Disney Chief Executive Robert Iger. "This is just the beginning of what we believe will be a long and prosperous relationship between Apple and Disney." Both the deal with Disney and the new products -- which also include an iMac with a remote control that acts as a home entertainment hub -- give Apple a chance to forge a leading position in online media, said Cross Research technology analyst Shannon Cross. "They are positioning themselves as the company that will connect video content to the end users and control your living room," Cross said. The company also plans to offer music videos for $1.99 each at its iTunes online music store. It will also offer short films from Pixar Animation Studios Inc., which is also led by Jobs.

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