Apple Offers Photos To Go

Users can scroll through 25 thumbnails at a time with the iPod's Click Wheel and can import files using iPhoto on Macs and Adobe (Nasdaq: ADBE) Photoshop Album 2.0 or Adobe Photoshop Elements 3.0 on a PC.

The iPod Photo comes with a two-inch color LCD screen that displays more than 65,000 colors. The device, which can be connected to a projector or a TV for a musical slideshow, is packaged with a docking station that includes audio and video out; earbud headphones; AV, FireWire , and USB cables; AC adapter; carrying case; and iTunes software CD. The software is compatible with both Mac OS X or Windows 2000/XP.

Video Model in Works?

The introduction was not a complete surprise, according to Morningstar equity analyst Rod Bare. "We knew a 60GB hard drive was under development, and there was speculation that it would work well for a photo device," he says. "The people at Apple are great innovators, and they know how to market. This is yet another way to introduce users to the Apple interface and to Apple's way of doing things."

While some have wondered if a video player could also be in the works, Bare is skeptical. "People don't tend to watch movies over and over again in the same way they listen to music."

Bare notes that there is great sensitivity to potential copyright issues, especially since Apple CEO Steve Jobs is also head of Pixar (Nasdaq: PIXR) Animation Studios. "No one wants to see the same thing happen with movie copyrights that happened with the music industry."

Mike McGuire, Research Director for Gartner (NYSE: IT) , questions how much demand there would actually be for video in such a small form. "Most people would prefer to watch on the larger screen of a notebook computer," he says. Apple spokeswoman Pamela Bennett said the company would not comment on future plans.

Mobile Options

The new iPod moves Apple into competition with other mobile hard drive offerings, such as handheld PCs and PDAs . Even mobile phones are joining the fray. EMI and the Carphone Warehouse have recently announced plans to offer music on a memory card that can be played by newer cellular phones. Morningstar's Bare says the music devices themselves "are really a few years behind in overall functionality. I expect the phone-centric devices to give them a run for the money."

In the end, though, Gartner's McGuire believes buying decisions will likely be based more on emotion than on technology. "People use their discretionary income to buy these devices because they desire them," he explains. "What's really important to folks is having their own music or other content available. These are not just tools to the buyers. Apple understands that, and Steve Jobs is the best salesperson the technology industry has because he doesn't talk in technical terms when he's talking about these products. He appeals to emotion."

Apple also announced a mid-November release of a special edition U2 iPod. The black or red 20GB units will sell for $349. In addition, the company will offer its first "digital boxed set," which will include all of the band's albums, on its iTunes Music Store. Expected to be available in late November, "The Complete U2" will sell for $149.