Wednesday October 12, 1:57 pm ET

SAN JOSE (Reuters) - Apple Computer Inc. (NasdaqNM:AAPL - News) on Wednesday unveiled a version of its market-leading iPod that also plays video, a long-rumored product that could further spark sales of the popular devices.

The video iPod has a 2.5 inch screen and comes with 30 or 60 gigabyte memory. It will be priced at $299 and $399, respectively, the company said at a news event in Silicon Valley.

Apple has already sold more than 28 million iPods since their introduction in October 2001 and now has about 75 percent of the market for digital music players.

The company has refreshed the iPod line-up many times since their introduction. Apple on September 7 unveiled the iPod nano, a pencil-thin device that uses memory chips instead of hard disk drives to store songs.

Apple also introduced a new iMac computer with a remote control to allow access to music, photos and movies at the same news event in California`s Silicon Valley.