Apple unveils more iPods

New digital music players include models with color screens, a mini with larger storage capacity.

February 23, 2005: 12:59 PM EST
by Katie Benner, CNN/Money staff writer


NEW YORK (CNN/Money) - Apple Computer Inc. introduced new versions of its hugely popular iPod on Wednesday.

The No. 1 seller of portable digital music players introduced a six-gigabyte iPod mini and 30- and 60-gigabyte models of the iPod photo with a color screen.

The new offerings also include a four-gigabyte model for $199 -- down from $249 previously -- and the new six-gigabyte model for $249.

"Clearly, Apple is responding to competition, because they wouldn't make a move like this if there weren't competitors," said Gene Munster, a research analyst with Piper Jaffray.

"This keeps the company a step ahead, and really leaves no room for competitors to successfully grab market share," Munster added.

Apple currently dominates the music player market, with more than 90 percent of the U.S. market for hard-drive based machines, according to market research firm NPD Group.

Apple will likely see a dramatic pick up in iPod mini sales due to the price reduction, said Charlie Wolf, a hardware analyst at Needham & Co. Wolf.

"For whatever reason, $199 tends to be a magical price point," Wolf said.

The new mini models have increased battery life and are available in kicked-up colors, Apple said in a statement; and they aren't the only item Apple is upgrading.

The new 30-gigabyte model of the iPod photo sells for a suggested $349 and holds up to 7,500 songs, while the 60GB model, for $449, holds up to 15,000.
Will shuffles sag?

Needham and Co.'s Wolf said that any reduction in the price gap between the mini and Apple's recently released iPod Shuffle, will likely take a bite out of the lower-priced music player's sales. The iPod shuffle sells for as low as $99.

"The margins on the mini are far higher than the shuffle, so if the mini steals sales, it's to Apple's benefit," said Wolf.

But most analysts were not overly worried about any negative impact a cheaper iPod mini will have on the shuffle.

According to Piper Jaffray, the company can't keep the shuffles in stock. The Apple store in Manhattan recently sold more than 300 of the new, flash-based music players in two to three hours, and all stores are reporting shuffle shortages, Munster said.

Apple specialist resellers have told Piper Jaffray that they have not received any iPod shuffles and that numerous customers are calling daily inquiring about whether there are any in stock.

Apple (up $2.70 to $87.99, Research) has seen shares almost quadruple in value over the last year on the success of its iPod music players, jumping from about $21 to more than $88. The stock was up more than 3 percent in midday Nasdaq trading Wednesday.

Earlier this month, the company announced a 2-for-1 split of its common stock.