Is PortalPlayer Showing Apple's Hand?

Ready for your wireless iPod?

Reading between the lines, such a product in the short-term pipeline seems to be the implication of a recent announcement from PortalPlayer (PLAY) and from what executives of the chipmaker had to say at an investor conference on Wednesday.

PortalPlayer, which provides multimedia processors for Apple Computer's iPods, announced Tuesday that it had signed a deal with CSR, a maker of WiFi and Bluetooth wireless chips, to add wireless capabilities to digital media players. The companies said they expected to have an integrated chipset available by the second half of this year.

A day later, at the Thomas Weisel Partners Technology Conference in San Francisco, PortalPlayer CEO Gary Johnson said the company expected to announce customers of the new chipset product by later this year. That same day, CFO Svend-Olav Carlsen said iPod-related sales comprised 95% of PortalPlayer's business, while predicting that such sales would be around 92% to 93% of total revenue this year.

In an interview with TheStreet.com, Johnson declined to say if or when Apple will release a wireless iPod. An Apple representative did not return a call seeking comment, but the company is typically tight-lipped about future product plans.

But it's hard to believe that PortalPlayer would launch a new product for the digital media player market without its biggest customer on board. Indeed, at the conference, Johnson said PortalPlayer had a "strong" relationship with Apple and was focusing on upgrading its technology for the iPod maker.

"I do believe we're keeping them [Apple] on the technology roadmap," Johnson said at the conference. "We're delivering the key attributes which keep them very successful."

Apple's resurgence over the last three years has been driven by the success of its iPod, which has become increasingly important to the company's overall operations. In the holiday quarter, for instance, the company sold 14 million of the digital music players and for the first time sales of the devices made up a bigger portion of total revenue than its Macintosh computers.