(FORTUNE Magazine) – APPLE HAS CHANGED ITS TUNE WITH its newest iPods, the fifth generation of the world's most popular portable music player. The old refrain: Consumers don't want to watch video on small, portable devices. They'll squint at the small screen. Distracted, they'll bump into things. And while they've gobbled up millions of music-only downloads at 99 cents each, consumers will have to pay more than twice as much for downloadable music videos and TV shows. Hmm, one can imagine Apple executives thinking, "Maybe video on the iPod isn't such a bad idea after all ..."

And thus was born the new video-capable iPod, which links seamlessly through Mac or Windows computers to a small trove of $1.99 video downloads on the Apple iTunes Music Store.

I suspect Apple's first analysis was the right one. As a video player the new iPod--$299 for a 30-gigabyte model, $399 for a 60GB version, both available in either white or black--is mainly a novelty at this point. The color screen has been enlarged by half an inch to 2½ inches, making it a clever showcase for viewing digital photos and album art but just barely tolerable for watching music videos or commercial-free episodes of a few popular TV shows while waiting for the bus or killing time in the doctor's office. For now, the selection of videos available from the Apple online store is quite limited--episodes of five Disney and ABC TV shows and some 2,000 music videos--but you know Apple will stock the shelves quickly. However, unless you're addicted to Desperate Housewives or Lost, or have a fascination with pre-bleached Michael Jackson "Thriller" music videos, the appeal of small-screen video is likely to fade quickly.

Viewed mainly as a music player, however, the new iPod is better than ever, offering more capacity in a slimmer package, with new features essentially tossed in free. For those shopping for their first portable music player, the iPod remains the standard against which all others are measured. No other portable music system matches the performance, design, and ease of use of the combined iPod and iTunes software. For those thinking of upgrading from an earlier iPod, though, the decision is a bit more complicated. In redesigning the iPods for video, Apple engineers once again demonstrated their remarkable talents for miniaturization. At the same time they made compromises and left out features that many rival players offer, like a radio receiver and the ability to update calendar and contact information on the go.

The new iPods no longer support FireWire, a high-speed file-transfer system that Apple co-developed and that is common on all Macintoshes. Instead, Apple appears to have switched its support to the equally fast but more common USB 2.0 system, both for moving files between iPod and PC and for charging the iPod's battery. If your Mac or PC has USB 2.0 ports, music and video files update swiftly; if you have a first-generation USB port, file transfers are excruciatingly slow. It took more than ten hours to transfer my 30-gigabyte music collection to the iPod from my older Macintosh G4. That's mostly a one-time-only problem, of course, but users who purchase lots of TV shows and music videos will want to spend an extra $30 to add USB 2.0 ports to their older PCs and Macs. Plan also to pay $19 extra for a video-out cable if you'd like to watch your downloaded videos on a TV screen, and $20 or more for a protective case to replace the practically useless one Apple includes in the box. As with all earlier iPods, the new ones--especially the black models--scratch easily and show fingerprints. Apple has tried to address the scratching problem with a new plastic faceplate, but an unprotected iPod that emerges pristine from the box can still develop scars within hours, even on the screen, without some sort of body armor. Frequent travelers will want to spend $29 extra for an AC adapter for charging the iPod.

The new iPods no longer have the top-mounted nine-pin serial port that was the a prime connector for an array of peripherals, including automobile adapters, voice recorders, and remote controls. That's probably no more than a minor inconvenience to first-time iPod buyers, who may have to wait a few weeks for new iPod accessories to show up in stores, but it's a major annoyance for owners of older iPods whose add-on gadgets and protective cases no longer work or fit properly.

Batteries are the traditional weak point for iPods, and while the new ones offer longer life, they still wear out and cannot be replaced easily. Apple claims the 60-gigabyte iPod will deliver up to 20 hours of continuous music playback; 14 hours for the 30GB iPod. In my tests the 60GB model's fully charged battery pooped out after 17 hours and 20 minutes. Watching video on the iPod requires much more juice, reducing battery life to just three hours on the 30GB model or four hours on the 60GB version, but limiting TV viewing to three or four hours a day probably qualifies Apple for a public service award. Because the videos are tailored for the small screen--320 by 240 pixels--the quality suffers greatly when viewed on a larger computer screen or a TV. Videophiles can forget any thoughts of using the iPod as a "sneakernet" alternative for moving video downloads from the PC to the TV, because the picture quality will be inferior even to that of a VCR, let alone a DVD. The bandwidth requirements of HDTV also make high-quality video on the iPod impractical. Only the h.264 and MPEG4 video formats are playable, and converting home movies or home DVD collections to those formats requires advanced technical skills. And because of Apple's proprietary copyright-protection system, the videos cannot be transferred to DVD or sent over a home network.

Those gripes aside, the real significance of the new iPods, in my view, is in Apple's software. Just as Apple made the legal buying, managing, and playing of digital music a simple and easy process, so too is it poised to revolutionize legal downloads of video. These new iPods may be the hardware equivalents of pilot programs. Stay tuned.

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