A lot has been written about Apple's unveiling of new video capability for the iPod. The best look at the new introduction as a business model innovation is this article by the New York Times' David Pogue.

Pogue's article points out that the new video feature:

Avoids "overshooting" consumer need, #1: Steve Jobs has said many times that "people just don't consume music and movies the same way....how many times do you watch a movie?" So, "[Apple] sidestepped the movie issue altogether; the new iPod comes ready to play short movies, music videos and certain ABC television shows--but not feature films. None of these items lose much when they're not on a big, wide screen."

Incorporates innovative pricing that will drive consumer trial: "$2 per TV show is a brilliant price. It's low enough to be an impulse buy -- when, for example, you missed an episode; it isn't high enough to drive you to using Bit Torrent or another illegal download source; but it's high enough to bring in some extra income to the TV companies."

Avoids overshooting consumer need, #2: "...you can't watch video while you're doing something else. Sales of video-only iPods...wouldn't hold a candle to sales of music iPods. This issue became moot yesterday, because Apple simply added video to the existing iPod. It's not a new model called the iPod Video; it's just that the regular iPod (with a new, even thinner shape) is now capable of playing video. Instead of thinking of it as a more limited iPod, they'll think of it as an iPod with greater "just in case" possibilities."