announced Wednesday it is replacing its mini line of iPods with a smaller, flash-based, digital music player called the iPod nano. The new player includes a color display and is priced beginning at US$199.00.

The nano, defined in the dictionary as "extremely small," features a thinner design than the iPod mini (0.27 inches) and weighs 1.5 ounces. It is available immediately in a 4 gigabyte (GB) model priced at $249 and a 2GB model priced at $199, with both models available in white or black designs. The 4GB iPod nano holds up to 1,000 songs and the 2GB iPod nano holds up to 500 songs.

All iPod nano models include earbud headphones, a USB 2.0 cable and a CD with iTunes for Mac and Windows computers. iPod nano features the same 30-pin dock connector as the iPod and iPod mini.

"The nano is a complete, full featured iPod with a color screen," Apple CEO Steve Jobs told CNBC Wednesday. "It is impossibly small. We've been working on this for a long time and really brought the best technology in the world to it. It's magic."

The iPod nano is thin as a number two pencil and weighes 1.5 ounces.

The iPod nano features optional accessories including lanyard headphones ($39), which integrate the headphone cables into the lanyard, so users can wear their iPod nano around their neck without dangling headphone cables. For customers looking to personalize their iPod nano with colors, an optional set of iPod nano Tubes ($29) -- or protective, rubberized sleeves -- in pink, purple, blue, green and clear offers fashionable protection in a sheer casing while enabling full operation of all functions including the Click Wheel. Optional armbands ($29) are available in gray, pink, blue, red and green.

The current iPod dock for the mini will work with the new iPod nano and retails for $39.00.