iPod Rumor Mill: 64 GB IPod Touch On The Way?

Chicago (IL) - It’s time for a new round of Apple rumors. Apple is widely expected to refresh its iPod lineup in August. There is your usual set of rumors out there with some interesting thoughts on likely changes and upgrades. Sources seem to agree that the upgrades will more evolutionary than revolutionary, which, if the sources are correct, may be surprising as Apple’s iPod sales growth shows signs of a slowdown and the company could need a new blockbuster media player sooner rather than later.

Apple’s long-standing commanding lead in music player space is all but given, especially now that competitors seem to launch new efforts to tackle its lead. Despite Dell’s withdrawal from the MP3 player market in 2006, the company is apparently planning a comeback with a new player slated for a September release. Apple Insider reported that Apple recently sent an advisory bulletin to a selected group of resellers, telling them to load up with iPods and certain Macs, a sign of upcoming shortages in the distribution channel ahead of a product.

With new iPods apparently just around the corner, we wonder whether Apple can deliver enough new features to woo consumers and keep competitors at distance.

More storage should be a given. Apple recently ordered 50 million 8 GB NAND flash memory chips from Samsung Electronics for use in iPhones and iPods (Toshiba, Micron Technology and Hynix Semiconductor are also Apple’s known memory chips suppliers). Porteligent president David Carey estimates that 8 GB NAND chips are selling for $20 today (and even less if you’re Apple), compared to $50 a year ago. Suppliers have been increasingly unhappy about Apple’s slow flash upgrade cycles and it appears that this scenario as well as a catastrophic market situation for flash will bring higher capacity models. It is safe to assume that we will see redesigns as well, not only because such a move refreshes the interest in a product, but also because Apple’s sales are heavily focused on the design of products.

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iPod shuffle: Price cut for 1 GB model, a new 4 GB model, redesign, new colors

It is hard to imagine slimmer and tighter iPods, so don’t expect significant form-factor changes. Multiple sources report a slight re-design, new colors and storage upgrades. Industry watchers believe a new 4 GB shuffle will be added to the mix. If Apple cuts the price of basic 1 GB model below $49, it could make shuffle model affordable to just about anyone in the world. Analysts point out how Apple re-ignited decelerating iPod sales when it cut iPod shuffle from $69 to $49 in February. However $50 may be just the barrier that still makes sense for a media player in terms of profit margins and we should not forget that Apple iPod sales have a big focus on increasing average selling prices of iPods (which are at just over $180 at this time) and not decreasing them. Apple is facing slower unit growth these days and an increase in average selling prices will be crucial for the company to maintain its revenue growth in this segment.

iPod nano: More colors, twice the storage, taller screen, new features

Multiple media outlets are reporting that the "fatboy" nano will get twice the storage - up to 16 GB. Piper Jaffray’s Gene Munster analyst previously said he is expecting "slightly redesigned iPods." The new form-factor could be eye-catching if a "reliable source" from Asia cited by 9to5Mac can be trusted. The source claims that the nano will also feature a multi-color body (multiple colors within the same unit), and new software features. The same source leaked the "fat" iPod nano images last year that proved to be real and were soon removed at Apple’s request.

However, iLounge thinks that the multicolored claim is "most likely inaccurate." Citing "extremely confident" sources, the web site claims that the nano will return to its original narrow form factor, but taller to accommodate a larger screen that will depart from the current 1.33:1 aspect ratio to match the iPhone’s 1.5:1 ratio. Apparently, it will be possible to watch movies in landscape orientation. Sources also claim that an anodized, one-colored aluminum frame will be used - similarly to previous nano models.

iPod touch: A new 64 GB model, price cut

The iPhone Atlas found a reference to a new iPod touch in the upcoming 2.1 firmware. Piper Jaffray analyst Gene Munster wrote in a note to clients that he expects "lower-cost touch-based iPods." Most analysts believe that Apple will bring entry-level 8 GB iPod touch down to $249, while some expect that a 64 GB model will be added to the mix. The touch-based iPod definitely needs price reduction as it is too expensive compared to the $199 iPhone 3G. MacRumors speculates that the iPod touch could get GPS capabilities. Although that would require additional GPS circuitry, it’s not impossible given Apple’s focus on location-based features in the iPhone.

iPod classic: No changes?

The iPod classic remains a mystery. There are virtually no leaks or rumors about a possible redesign, a price cut, form-factor changes or color updates, which strongly suggest that Apple will stick to the current look and feel. Apple still needs a hard drive-based iPod for its fame and huge capacity. But make no mistake about it, its days are numbered as the iPod touch sets the ground for the transition of iPod family to touch screen-based controls and flash-based storage. "We expect the click-wheel versions of the iPod to wane in favor of touch-screen-based models," said iSuppli’s Andrew Rassweiler.

Of course, this transition will not happen overnight. Apple will wait until solid-state storage drops to more favorable levels in terms of pricing and capacity, which could take at least another year or two.