Updated from 2:27 p.m. EDTSAN 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
Analysts had been predicting that Apple would unveil a new flash-based player sometime this year. In order to make the device, the company has
reportedly agreed to purchase as much as 40% of Samsung's NAND flash output in the second half of this year. As impressive as the nano is in terms of design, Apple took a step back in terms of capacity. For the same price as the 2GB iPod nano, customers previously could have purchased a 4GB iPod mini. Likewise, the 4GB nano sells for the same price as Apple's previously offered 6GB iPod mini. The new phone from Motorola, called the Rokr, is being offered exclusively through Cingular Wireless. Long in the planning, the phone is available now for about $250, including a two-year contract, on Cingular's Web site, and will be sold at Cingular retail stores beginning Thursday. But it remains to be seen how popular the Rokr will be. The phone holds just 100 songs at a time, and users won't be able to download songs over Cingular's network. Instead, users will only be able to add music to their phone via a cable connection to a computer. Apple announced its partnership with Motorola last year, but the iTunes-enabled phone has been repeatedly delayed, according to published reports.
During his presentation, Jobs initiated a videoconference with Madonna via an onstage computer to thank her for agreeing to the deal. "I tried to hold out as long as possible," Madonna said in the conference. "I got tired of not being able to download my own music." The updated version of iTunes, which Jobs said will be available through the company's site later Wednesday, is the fifth iteration of the software. One potentially significant new feature in the Windows version of the software is a conduit that will allow iPod users to sync the calendar and address book on their iPods with Microsoft's ( MSFT) Outlook program. The Mac version of iTunes already syncs with similar programs on that platform. In total, the iTunes update did not include any major new features, just a string of minor upgrades that primarily focus on making the software better looking and easier to use. Apple's stock, which
soared to a new high Tuesday in anticipation of the announcement, got an initial boost Wednesday as well before tailing off. In recent after-hours trading, the company's shares were off 13 cents to $48.55, having closed the regular session down 12 cents to $48.68. But earlier in the day, Apple's stock traded up as much as 60 cents, or 1%, to $49.40. Shares of Motorola also traded slightly off after the announcement; they closed the regular session down 5 cents $22.36.