Apple refreshes iPod line-up, cuts prices, retools iTunes

Jobs returns in first appearance since October, touts video camera in iPod nano

The new iPod sports a video camera

The new iPod sports a video camera

Apple CEO Steve Jobs today took the stage at a company event for the first time since October 2008 to introduce new iPhone software, a revamped iTunes, reduced iPod Touch prices and a video camera slipped into the iPod nano.

The event was strikingly similar to last year's iPod refresh , said Ezra Gottheil, analyst with Technology Business Research, and with the exception of Jobs' appearance, held very few unexpected announcements, at least on the surface.

"There weren't any major surprises," said Gottheil. "They did with the iPod Touch what you thought they would, and the same with the Shuffles," he said, citing some of the price cuts for the iPod line Apple unveiled today.

But below the surface, Apple hinted at major shifts.

"I'm eager to look at the new iTunes," said Gottheil, referring to iTunes 9, an update that Jobs touted during his time on the stage. "What struck me about iTunes were clues about where Apple has some real potential. There are now 50 million devices running the iPhone OS, which is more [devices] than all the Macs Apple has sold since the first quarter of 2001. In other words, the iPhone OS is probably more prevalent than the Mac OS."

Jobs noted that Apple has sold 30 million iPhones since the smartphone debuted slightly more than two years ago, while Philip Schiller, Apple's head of marketing, later said the company has sold approximately 20 million iPod Touches, the pocket-sized device that mimics the iPhone in all but the ability to make and take calls.

"iTunes has a very different interface than the typical desktop," Gottheil said, "and the addition of application organization in iTunes makes it a much more useful interface for consumers. It lets consumers juggle thousands of apps, and sync several devices, which is what people want. If there was a tab in iTunes for data files, I can see myself living in [iTunes]."

For Gottheil, the undercurrent at today's event was the case that Apple implicitly made for stretching the iTunes-iPhone interfaces to other, future devices.

"It's reasonable to think that the iPhone OS would sit on the tablet, and on the TV," he said, speaking of the tablet-style device Apple is rumored to be aiming for 2010, as well as its current Apple TV box.

"For getting down to work, menus, dating back to the Xerox PARC [Palo Alto Research Center], are the way to go. But if you're juggling video, music, playing from games to songs to video with a bunch of different apps, the iPhone interface is a lot more comfortable than menus."

On the scene in San Francisco, however, Apple stuck to a more traditional marketing message: new iPods with more storage space or at reduced prices, new software with more features.

Apple dropped the price of the 8GB iPod Touch from $US229 to $US199, and doubled the memory in the $US299 and $US399 models to 32GB and 64GB, respectively. It also reintroduced a 2GB Shuffle, priced at $US59, while keeping the formerly-available 4GB model at $US79.

Contrary to some rumors, Apple retained the iPod Classic, the only model in the music player line-up that still relies on a hard disk for storing songs, movies and TV shows, rather than solid-state memory. The Classic also got a storage boost, from 120GB to 160GB, while the price stayed at $US249.

The iPod Nano, on the other hand, now sports a video camera, a feature Jobs himself strutted as he compared the miniature player to the popular Flip video camera. "We're going to build a camera into the back of every Nano," said Jobs. Other features new to the iPod Nano include Cover Flow capability, a voice recorder and external speaker, and a built-in pedometer to track users' exercise.

Apple boosted the 2-inch screen of the previous Nano to 2.2-inches, and priced the video camera-equipped device at $US149 for 8GB and $US179 for 16GB.

On the software front, Apple revamped both the iPhone's operating system -- taking it to version 3.1 from June's 3.0 -- and iTunes.

Among the features of the former, Jobs talked up the introduction of the iTunes "Genius" functionality, which builds recommended lists of iPhone and iPod Touch applications based on what a user owns. The new software also supports ringtones on the iPhone, with those shortened tunes priced at $US1.29.

The iPhone 3.1 software is available today for downloading via iTunes, and is free for iPhone owners, as well as iPod Touch users who earlier paid the $US9.99 upgrade fee to v. 3.0.

iTunes, on the other hand, received a sweeping redesign that boasts iPhone/iPod Touch application management, a content sharing feature that lets users copy songs and TV shows between as many as five different computers in the same household, solving the problem of splintered libraries on separate machines.

As expected, iTunes also supports additional content packaged with albums. Dubbed "iTunes LP" by Jobs, the effort -- supported by the major music labels -- is designed to tempt consumers into purchasing entire albums, rather than just single tracks, to get such extras as photographs, liner notes and essays.

Like the iPhone 3.1 software, iTunes 9 is available immediately for downloading to Macs and Windows PCs.

"The Nano and the Classic and the Shuffle are all relatively mature categories," said Ross Rubin, an analyst with the NPD Group. "We didn't see any radical changes there. Even the camera in the Nano may not yield the same kind of usage that Apple's hoping for, what with it not having the Wi-Fi that's in the Touch or the App Store platform."

Other than the video camera in the Nano, there weren't any big surprises, Rubin said, echoing Gottheil. "But there were some welcome announcements," he added, pointing to iTunes' new application management.

Gottheil, however, disagreed as to the new Nano's significance. "Video in the Nano could easily drive Mac sales," he offered.

But he saved his biggest praise for the long-term strategy he saw Apple demonstrate today. "When the number of installed iPhone OS [devices] passes the Mac, they reach the point where they have become the next-generation after the computer."

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