Apple on Tuesday announced a new iPod touch, replacing the previous model that was introduced in 2015.

The new iPod touch starts at $199 and includes Apple's A10 Fusion processor, the same chip used in Apple's older iPhone 7 that launched in 2016. That means it's not as powerful as Apple's latest iPhones, but there are still some upgrades over the last iPod touch.

It includes support for augmented reality apps, for example, which also work on the latest iPads and iPhones and allow people to place digital objects on top of the real world. It will also support all of Apple's new services, including Apple News+, Apple Arcade and Apple TV+, which launch later this fall, and Apple TV Channels. It also supports Group FaceTime, which allows up to 32 people to video chat at the same time.

Apple's hardware sales have plateaued, so the company is relying more on services to spur its business. People don't seem to be buying iPods anymore, but the $200 price point may appeal to people who want to give their kids a device that can access Apple's content without paying for a phone data plan. It's cheaper than Apple's entry-level iPad, which starts at $329.

The $199 iPod touch will ship with 32GB of storage, which isn't a whole lot if you download movies, music and apps. Apple will also sell a $299 model with 128GB of storage and a $399 model with 256GB of storage. It comes in gray, white, gold, blue, red or pink.

Apple is taking orders for the new iPod touch Tuesday and the device will be in stores later this week.