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SAN JOSE, Calif. - Apple Computer Inc. unveiled Wednesday an iPod capable of playing videos, 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.

Analysts consider Apple`s much-anticipated introduction of 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.

``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.

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. A 30-gigabyte version 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 told assembled journalists and guests.

The video iPod will lock TV shows and music videos downloaded from the iTunes store with copy-protection software, just as Apple does for music. But it will also support the MPEG-4 video standard, meaning users could view home movies and other unencrypted videos on it.

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, 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 desktop computer.

Apple shares fell $2.71, or 5.3 percent, to $48.88 in Tuesday afternoon trading on the New York Stock Exchange. The shares` 52-week low was $18.83 on Dec. 12, 2004.

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.

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