Apple Expands Core

Updated from 2:27 p.m. EDT

SAN FRANCISCO -- Apple(AAPL) is updating its music offerings again.

The company is replacing its most popular iPod model -- the iPod mini -- with an even smaller flash-memory based digital music player, dubbed the iPod nano.

And in a widely expected move, the company announced the first fruit of its partnership with Motorola(MOT): a new phone that is the first to include Apple's iTunes software.

Apple also announced a new update to its iTunes program and two high-profile, exclusive products to its iTunes store: audiobook versions of the Harry Potter novels and a complete collection of albums from pop star Madonna.

"My prediction is this [the nano] will instantly become the highest-volume, most popular iPod in the world," CEO Steve Jobs said at an event at the Moscone Convention Center here.

The ultraslim nano will come in two flavors -- a 2-gigabyte model priced at about $200 and a 4-gigabyte model priced at about $250. In addition to being a fraction of the size of the iPod mini, the nano includes a color screen, something its predecessor did not. And unlike the mini, which Apple offered in several different colors, the nano will come in white or black only.

Apple will begin selling the devices Wednesday, Jobs said. However, the device may be hard to find. The Apple retail store in downtown San Francisco did not have any nanos in stock Wednesday after Jobs' announcement.

A clerk, saying that he didn't know when the store would get any in, directed interested customers to Apple's online store.

The company's online store said it will ship nanos in 1 to 3 business days, but the company in the past has often been overwhelmed by orders for new products, so those shipping dates could change.