October 13, 2005 in Business

IPod breaks into TV lineup

May Wong Associated Press
 
Associated Press photo

Apple Computer Inc. CEO Steve Jobs gestures as he shows the new iPod with U2 playing in the background during an unveiling in San Jose on Wednesday.
(Full-size photo)

SAN JOSE, Calif. — Apple Computer Inc. introduced an iPod capable of playing videos on Wednesday, 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.

The much-anticipated new iPods, available starting next week, will replace Apple’s current 20-gigabyte and 60-gigabyte models. A 30 GB version will sell for $299 and a 60 GB will cost $399.

Apple hopes to repeat with Hollywood the coup it achieved with music labels: Ease an industry’s piracy fears and transform its business models to include convenient, legal distribution of digital content over the Internet at reasonable prices for consumers.

“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. Short films from Pixar also will be sold on the iTunes online store.

But that’s just the beginning, Apple executives say, noting that the iTunes store catalog has grown to 2 million songs from 200,000 at launch in 2003. More than 600 million downloads have been recorded since.

“We’ve gained a lot of credibility in the industry in the past two and a half years with what we did with songs,” said Eddy Cue, Apple’s vice president of applications. “And that’s what we’re trying to mirror in the video space.”

Analysts consider 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.

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. Apple said the 30 GB model will have up to 14 hours of battery life while the 60 GB model’s battery will last up to 20 hours. Both versions will include a clock, a calendar, 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, films and music videos downloaded from the iTunes store with copy-protection software — just as Apple does for music. Users will be able to download purchased video to up to five computers and transfer it to iPods, but unlike songs, users will not be able to burn the videos onto a CD.

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.

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, about 6.5 million iPods were sold, accounting 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 two newer, thinner models of the all-in-one iMac desktop computer.

Each of the 17-inch and 20-inch iMac G5 models, priced at $1,299 and $1,699 respectively, comes with a built-in webcam and a slim, six-button remote control about the size of thin pack of gum.

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