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Report of iPhone nano Sends Rumor Mill Into Overdrive

By Walaika Haskins MacNewsWorld ECT News Network
Sep 4, 2007 1:14 PM PT

iPod owners may soon be saying farewell to an iPod feature that's been a part of the top-selling media player since its launch in 2001 -- the iconic clickwheel.

Report of iPhone nano Sends Rumor Mill Into Overdrive

According to a Washington Post report, Apple's planned press event Wednesday could include the unveiling of a new iPod sporting an iPhone-like touch screen and WiFi capabilities, as well as the introduction of an iPhone nano -- just two months after the debut of the original iPhone -- according to a Washington Post report.

Papers cited by the Post, prepared by an Apple partner, point to a launch just in time for the holidays for the latest iterations of the iPod and iPhone.

Buzz Maker

When it comes to generating buzz for its products, Apple is second to none. Whether it is the iPod, the iPhone or a new model for the Mac or MacBook, the company releases just enough information to set tongues wagging and bloggers tapping out the possibilities on their keyboards.

The rumor mills have been spinning for months about a revamp of the iconic video and music player and what groundbreaking features the devices will sport this time around. However, last week, following Apple's cryptic announcement that it will make a major announcement Wednesday, speculation on blogs and among industry watchers hit stratospheric levels.

Media and Apple devotees, teased by reports of invitations decorated with so-caled Cover Flow album cover art similar to that displayed on Apple's iTunes jukebox software, are in a dither trying to decipher the invite's imagery and the significance, if any.

However, with over 100 million units sold, the question is, how does Apple manage to create a huge stir each time it does anything with an "i" in front of the product name? It comes down to two things, Rob Enderle, a principal analyst at Enderle Group, told MacNewsWorld. First, Apple and the iPod have an almost rabid fan base. Second, the company manages to keep a tightly secured lid on any information, keeping products secret until the last minute to drive up interest.

Interest is not the only thing the company's tactics manage to drive up. Apple's stock since the introduction of the iPod in October 2001 has risen from an average of US$8.78 to an average of $138.48 in August. Following the announcement of Wednesday's event, the company's stock prices went up some 9.2 percent, from $130.83 the morning of August 28 to $143.97 on Sept 4.

Apple can continue to create a buzz with new versions of the iPod not only because the device sells well, but also because it has such a tremendous impact on other industries, including the music business, the television and movie business, and the telecommunications market, James McQuivey, an analyst at Forrester Research, told MacNewsWorld.

"Anything that can disrupt so many different industries at once deserves attention," he pointed out.

Smoke Screen

The frenzied atmosphere serves a dual purpose for Apple, according to Enderle, that keeps consumers from taking too hard a look at the product.

"[It] keeps people from looking at the product closely until Steve [Jobs] can talk about it and they then build a frenzy on his words," Enderle pointed out. "It often takes a while before anyone can point out the shortcomings -- and all products have shortcomings."

However, he continued, Apple may have bitten off more than it can chew this time around with the supposed iPod announcement coming just months after it launched the iPhone.

"The problem this time is that expectations are set by the iPhone, and if the product falls short of that, there could be issues, and doing an iPod with iPhone functionality will be difficult given the true cost of the iPhone is closer to $900 [without AT&T's subsidy]."

Apple, he added, has thus far held the price of the iPod constant. The additional functionality, if true, would require more capacity than the iPhone at the high price points that iPhone enjoys.

"Apple dances around issues like this very well, but this time, the dance will be particularly difficult."

100 Million Served

Fewer than one in three households have an iPod or other MP3 player, according to McQuivey, and some would argue that the devices could continue to sell until they reach the penetration mark of Sony's Walkman. At its peak, 80 percent of homes in the U.S. contained that device.

"Because an MP3 player is much more complex, the actual saturation point is probably much lower than that," McQuivey explained, "but it means companies like Apple want to be the ones who find the outer boundary of adoption, rather than letting another player sneak in and grab that last acre of land."

In addition, Apple can also look for growth from existing iPod owners, he continued. Thirty percent of iPod owners have more than one, so the introduction of new iPods with sophisticated features that will be most appealing to the same people who bought an iPod four years ago.

"So, I expect that much of the uptake of new iPods will be among existing users," he stated.

Enderle agreed, adding, "Apple is basically churning a very large installed base now."

iPod = Innovation

None of the devices released by companies seeking to challenge Apple have been compelling enough to make iPod users switch en masse. There have been some small defections, Enderle acknowledged, but nothing that could threaten the iPod's dominance in the market.

"We'll see what happens when the rumored next generation of possible iPod killers comes out in a few weeks, but iPod users are relatively satisfied, making them very difficult to move," he pointed out.

If Apple wants to churn its base, Enderle continued, it will need to make that base dissatisfied with the current generation of devices, which are likely good enough today. However, without compelling new features to induce iPod owners to head to the store or online, they will not abandon their trusty old device before the battery wears out.

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Which of these tech companies has the greatest *positive* impact on society?