Apple's Big Announcement is Nano

SAN FRANCISCO -- Apple's strategy with its new iPods might have drawn inspiration from one of Steve Martin's old comedy bits: "Let's get small."

Apple announced new shapes and sizes for its wildly successful iPod music player.

And it confirmed the news that iTunes will be built into a new Motorola ROKR iTunes phone sold by Cingular. But Apple managed an element of surprise at a news event here: the tiny new iPod nano, replacing the iPod mini at less than half the size.

"Today we're doing something pretty bold," said Apple CEO Steve Jobs. He said despite the fact the iPod mini is the most popular MP3 player in the world, and the main iPod competitors are gunning for, Apple decided to replace it with a new design.

But unlike Apple's other small player, the $99 iPod Shuffle, nano sports a color display and a click wheel for navigating song selection. Slated for immediate availability, iPod nano comes in two versions, $199 with 2GB of storage, or $249 with 4GB of Flash memory capable of holding 500 to 1,000 songs, respectively.

The iPod nano. Courtesy of Apple

Cute touch: optional accessories for the iPod nano include multicolored protective covers called nano Tubes. Apple also is offering the iPod nano in black and the standard white.

As small as iPod nano is, Apple has big hopes to reach new customers who may not want to carry a separate music device with the ROKR iTunes phone.

"This is going to be a test of whether the U.S. market has enough people interested in merging content onto a mobile phone," said Mike McGuire, research director for media at Gartner told internetnews.com. "It's going to be a challenge because in the U.S., unlike other parts of the world, the phone is mainly used for voice so we'll have to see if listening to full length songs on your phone will resonate with consumers."

McGuire also noted that listening to podcasts on the ROKR might prove a popular application.

The ROKR iTunes phone is priced at $249 with a two-year commitment to cellular service from Cingular. It includes a color display, camera, built-in dual-stereo speakers, stereo headphones and USB connection for transferring songs and other audio files.

Ever since the original Macintosh, Apple has been criticized in some circles for not licensing its technology to grow the market. Apple did license iPod to HP, but HP dropped iPod this summer after lackluster sales.

"HP got nothing out of it, they were just polishing Apple's Apple," Roger Kay, president of Endpoint Technologies, told internetnews.com. The deal with Motorola and Verizon is different. "Apple is taking less of the pie because I think they're serious about defending the iPod franchise."

Jobs ticked off several sales milestones for iPod and iTunes.

He said iTunes is the world's biggest online music store with over two million songs available. The company started with 200,000 at its debut, and has since sold some half a billion songs worldwide to some ten million credit card accounts. Conceding that it's hard to get exact numbers, Jobs boasted Apple's iTunes store may be the second largest ecommerce site behind Amazon.

Moving to push that number higher, Jobs announced several content exclusives. The iTunes store will carry audio versions of all the "Harry Potter" books and all fifteen albums of songs by Madonna who participated in the event via a live video hookup using Apple's iChat.

Madonna had resisted making much of her work available through online downloads, but said she decided to go with Apple because "I got tired of not being able to download my own songs."


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