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by Michael Singer, Scott Ard and Leslie Katz
C|NET News
Sep 7, 2005
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SAN FRANCISCO--Apple Computer on Wednesday
unveiled a tiny new iPod that will replace the popular iPod Mini and
a cell phone capable of playing music downloaded from a computer running
iTunes.
At an invitation-only event for journalists and others here, Apple CEO
Steve Jobs pulled the new iPod Nano from his front pocket and declared:
"1,000 songs in your pocket and impossibly small."
The fully featured Nano, which is thinner than a pencil and roughly
the size of a business card, uses flash memory rather than the small,
spinning hard drives used in Minis.
The Nano replaces the Mini line, which is located in the middle of Apple’s
lineup--in size and price--between the diminutive Shuffle and the capacious
iPod. The Mini is Apple’s best selling version of the iPod, and
Jobs predicted the Nano will be a worthy successor. It "will instantly
become the highest volume and most popular version of the iPod,"
he said.
iPod Nano comes in black or white and in two sizes: the 4GB iPod Nano
holds about 1,000 songs and the 2GB iPod Nano holds 500 songs. They
cost $249 and $199, respectively, and will appear in some Apple stores
beginning Thursday.
The Mini line it replaces comes in four colors and in capacities of
4GB for $199 and 6GB for $249.
"iPod Nano is the biggest revolution since the original iPod,"
Jobs said. "iPod Nano is a full-featured iPod in an impossibly
small size, and it's going to change the rules for the entire portable
music market."
The Nano features the same 30-pin dock connector as the iPod and iPod
Mini, allowing it to work with a wide range of accessories, including
home stereo speakers and car adapters.
JupiterResearch analyst Michael Gartenberg said the iPod Nano would
be just as popular as the Mini.
"This is the kind of thing that Apple loves to do--make a product
and then turn around and try to make it better," Gartenberg said.
"I think the Nano will be a big hit, especially with sports-minded
individuals and younger consumers.
Extending the iPod/iTunes franchise into a new market, Apple and Motorola
on Wednesday also unveiled the Rokr, a color-screen cell phone that
can hold music downloaded from iTunes. The product had been expected
since July 2004, when Motorola and Apple announced plans to collaborate
on a music-capable phone.
"Today the talk ends and the music begins," said Ralph de
la Vega, chief operating officer at Cingular, which will be the exclusive
U.S. carrier of the phone.
The Rokr will be available this weekend in Cingular stores and sooner
online at $249.99 with a two-year service agreement. It can hold only
100 songs, even if the consumer inserts a memory card larger than the
512MB card that ships with the phone. The Rokr has a color display and
features built-in stereo speakers, as well as stereo headphones that
also serve as a mobile headset with a microphone.
The Rokr could help Apple crack a potentially vast new market--hundreds
of millions of cell phones are sold each year. In North America, Motorola
is the largest handset maker and Cingular is the largest service provider.
As is the case with most Apple product announcements, the company employed
star power to add to the glitz. Following Jobs' unveiling of the devices,
rapper Kanye West took the stage to sing two songs. And making an appearance
from London, via iChat, was Madonna, who touted her new album, as well
as the just-announced availability of her vast library on iTunes.
iPod sales have propelled Apple into a leading market position, with
a 53 percent share of all digital-music players, according to a report
released Tuesday by Solutions Research Group. Sony and RCA tied for
a distant second with 9 percent share each.
Apple's success has had a tremendous ripple effect on the digital-music
player industry. D&M Holdings, which makes the Rio music player,
said last month that it is shuttering its portable digital-audio division,
in part because of Apple's domination.
Despite Apple's steps into the mobile-phone music player space, analysts
are mixed on its effect on the iPod generation.
"I see the move as largely defensive," said Roger Kay, president
and chief analyst with Endpoint Technologies Associates. "A cell
phone is not the optimal device for listening to music."
Kay noted that Apple should be concerned that other handset makers and
network providers might try to bypass the need to work with Apple, given
that cell phones are already exceptionally popular and increasingly
capable of playing music.
Gartner analysts estimate 780 million handsets will be sold this year
alone with 1 billion cell phones sold every year by 2009.
Other analysts, such as Tim Deal with Technology Business Research (TBR),
say that Apple's move into the cell phone market is a natural evolution
of not only its iPod strategy but its iTunes store as well.
"The pervasiveness of cell phones in the world makes sense that
there should be a relationship of these cell phones and iTunes,"
Deal said.
Motorola is also banking on more sales of its handsets with Apple as
a partner. Gartner ranks Motorola as the No. 2 global seller of cell
phones behind Nokia, which recently released its own N91 handset. Capable
of playing music, the N91 has a color screen, a camera and 4GB of storage
that can hold about 1,000 songs. Samsung's SGH i300 and Sony's Walkman
W800 also are similar to Motorola's Rokr.
Motorola's iTunes phone also has significant market potential for Cingular.
According to Solutions Research Group, 14 percent of Cingular's customers
have a digital music player. A larger proportion, 17 percent of those
surveyed, report that they want to buy one within 12 months, the report
said.
Also on Wednesday, Apple announced an upgrade to the iTunes software.
Available now, iTunes 5.0 has a more streamlined appearance and enhanced
search capabilities.
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