That is changing. A new miniature-chip technology from Texas Instruments (TXN) called pico is making digital projectors truly portable, instead of merely luggable. For the past couple of weeks, I’ve been using two of the first pico-based projectors on the market, Dell’s M109S and Optoma’s Pico PK-101.

The products are designed for different customers with different needs. Dell (DELL) positions the 13-ounce M109S as a notebook companion, best suited for work presentations. The four-ounce Optoma projector is designed more as an iPod or digital-camera accessory for watching movies and slide shows on the go.

The Dell M109S

Their portability requires compromises, most obviously in brightness and image resolution. The Dell and Optoma projectors, respectively, support 11 and 50 lumens — a standard measure of projector brightness. That’s far dimmer than top-notch projectors that offer several thousand lumens. So neither product excels in well-lighted rooms, where overhead and ambient lighting overpower their images. You can compensate somewhat for this weakness by placing the devices closer to the surfaces onto which they’re projecting — for example, a wall. But the darker the room you use, the better.

At about the size of a candy bar, the $399 Optoma device is the smaller of the two projectors and the one with the most intriguing possibilities for expanding the tiny screen sizes of mobile devices like the iPod.

It’s powered by a rechargeable battery that Optoma says lasts for an hour on full brightness or two hours on a power-saving setting (the projector comes with two batteries). The projector has a tiny speaker, but people who want decent sound will need to use headphones or external speakers.

In theory, the Optoma device is small enough to bring along on a camping trip to show a film on the side of a tent, or to a restaurant, where you could inflict a vacation slide show on dinner mates by projecting onto a napkin or tablecloth.

I tested it on a recent airplane flight by projecting an episode of “Mad Men” from an iPod touch onto the back of the seat in front of me. The seat was a dark blue with embossing on it, so it didn’t work very well. It’s best to project onto an unmarked, light-colored surface. The quality of the image was better when I lay in bed one night, projecting a video onto a white ceiling.

Even under the most favorable circumstances, however, I found the images from the Optoma projector very dark, muddling the outlines of characters and action on screen. Although Optoma says you can get up to a 60-inch image from the projector, 45 inches was about as big as I could make the image before it got too fuzzy.

Optoma says the projector will ship with an iPod-compatible connector cable when it goes on sale in the U.S. on Dec. 15, though the unit I tested didn’t come with one. I connected the device to my iPod touch using a $50 cable from Apple (AAPL).

Compared with the Optoma device, the $449 Dell M109S is a behemoth, yet it’s still only about the size of a short stack of drink coasters. Most projectors weigh at least a few pounds, if not more, which is big enough to make them a hassle to carry around. I barely noticed the Dell projector inside my laptop bag.

Unlike the Optoma projector, the Dell M109S has to be plugged into an electrical outlet to work. It comes with an unsightly set of connectors for plugging the projector into a video source, such as the VGA port found on most laptops and a composite video plug that is standard on DVD players. I was, however, able to plug my iPod touch into the Dell projector using the $50 Apple cable.

And unlike the Optoma, the Dell doesn’t have speakers. To get sound for a movie, you’ll need headphones or speakers, like those on a laptop.

Despite its extra bulk, the Dell M109S literally outshines the Optoma projector. It produces a bright image that I found very watchable, even if it wasn’t high-definition. I projected the movie “James and the Giant Peach” onto an interior wall of my house, creating an image that was about 7 feet, measured diagonally.

The Dell M109S includes a capability called keystone correction, a standard feature in most projectors that adjusts a projected image to give it the proper dimensions, rather than the trapezoidal shape that results when a projector is angled upward. The Optoma projector doesn’t have this feature. To get a normal rectangular movie image, I had to hold the projector level, toward the projection surface.

For business travelers who do presentations or for people who want to create a theater-like experience in a hotel room, vacation house or against a sheet in the backyard, the Dell projector would be a good fit. For now, the Optoma projector is a good idea that needs refinement.

• Email Nick.Wingfield@wsj.com. Walt Mossberg is on vacation.

Amazon (AMZN) launched a new service called Amazon Video on Demand, which allows users, for a fee, to watch any of 40,000 TV episodes or movies, in real time, on their Windows and Macintosh computers, and on specially equipped Sony Bravia TV sets. This service replaces an earlier Amazon video offering called Unbox.

I have been testing Amazon Video on Demand and I found it worked well, although it has some limitations. The user interface is clean and smart, the quality is good if you have a fast Internet connection, and there are some clever features. On the downside, it works poorly with the slow connections typical in places like hotels. And there are some studio-imposed limits on what content is offered and how you can view it.

To date, there have been three major models for legally getting TV shows and movies from the Web.

In one, best represented by Apple’s (AAPL) widely used iTunes store, the TV shows and movies are ad-free, but you pay for each. All of this content is downloaded to your Windows or Macintosh computer or your Apple TV set-top box for later viewing, even when you’re not connected to the Internet — though on Apple TV you can start watching while the material is being downloaded.

A second model, best represented by the studio-owned Hulu.com, presents movies and TV shows on a Windows or Macintosh personal computer free of charge, but requires you to watch commercials that can’t be skipped. The TV shows and movies you view on Hulu are “streamed” rather than downloaded, meaning they are meant to be viewed immediately, in real time, rather than stored for viewing when you’re not connected to the Internet.

The third online model is best represented by Netflix (NFLX), the popular DVD distributor. It offers a “Watch Instantly” streaming option on Windows PCs or on TVs equipped with a special set-top box, for a small portion of its large catalog of TV shows and movies. These videos are ad-free and don’t carry an individual charge, but require a monthly subscription fee.

The new Amazon Video on Demand service is a hybrid of these others. As on iTunes, the TV shows and movies it offers are ad-free and purchased individually, don’t require a subscription, and work on both Windows and the Mac, plus on one type of set-top box. In Amazon’s case, that’s Sony’s Bravia Internet Link, a $299 device that works only with Sony (SNE) TVs.

But, like Hulu and Netflix and unlike Amazon’s older Unbox service, the new Amazon Video on Demand service offers videos via real-time streaming. In many cases, it also allows downloading, iTunes-style, to Windows PCs (but not Macs) and to TiVo devices attached to a TV. The videos can’t be streamed in real time using a TiVo (TIVO).

Amazon’s streaming videos are viewed in any of the major Web browsers and don’t require any special software. I tested the new service on both Windows PCs and Macs, and on a Sony Bravia TV equipped with the $299 adapter box. In my tests, Amazon’s videos looked quite good over a fast Internet connection. However, on a typically lousy hotel Internet connection, the movies were often grainy and kept stuttering.

The new service doesn’t yet offer videos in high definition, something Apple just announced this week it is adding for some TV shows. Amazon says it is working on HD.

Amazon’s user interface for the new service is very nice. All of your purchased videos are available in a library stored on the company’s servers, so you can easily watch them again and again if they are purchased, or resume a partly watched rental. And the service remembers where you stopped watching a video and resumes it at that point, even if you started it on, say, a Dell (DELL), and resumed it on a Mac.

On the downside, the new Amazon service isn’t always simple or consistent. For instance, you can watch only two videos at a time, and not all titles can be either streamed and downloaded, or be either purchased or rented. Most rentals last 24 hours, but some differ.

Selection was OK, but not great. Because of studio policies, many current and recent movie hits aren’t available. There are gaps as well in the TV selection. For example, while iTunes offers the current second season of the excellent “Mad Men” series, Amazon has only the first season.

Prices also can be confusing. Amazon rents most movies for $3.99 and sells them for between $9.99 and $14.99. TV shows generally cost $1.99. But some titles carry different prices, albeit these are often lower.

All in all, Amazon Video on Demand is a good service for people who prefer paying for ad-free TV shows and movies, and is another strong step in the Internet’s rising competition with traditional TV.

Find all of Walt Mossberg’s columns and videos online, free, at the All Things Digital Web site, walt.allthingsd.com. Email him at mossberg@wsj.com.