Apple Shares Shine After iPod Launch

Apple's stock gets a boost after the firm introduced a smaller, 'talking' iPod Shuffle.
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Shares of

Apple

(AAPL) - Get Report

got a boost in early trading Wednesday as investors warmed to the launch of the firm's

new "talking" iPod shuffle

.

The tech firm's shares rose $4.24, or 4.19%, to $93.05 by lunchtime, outpacing the tech sector's continued rally, which saw the Nasdaq rise 1.01%.

The latest addition to Apple's iPod family is much smaller than earlier versions of the technology and speaks the names of songs and artists.

Priced at $79, the new iPod has a capacity of 4-Gbytes, which is about 1,000 songs, and is described by Apple as being smaller than a AA battery. The first pictures of the new iPod highlight its diminutive size by showing it next to a standard door key.

Despite an increasingly tough spending climate, the iPod continues to be popular with users, as evidenced by the company's recent

first-quarter results

. The Cupertino, Calif.-based firm shipped more than 22 million iPods during the quarter, compared with 11 million during the prior three months.

Overseas markets, however, accounted for virtually all of this growth, with iPod unit sales in the U.S. contracting about 3% year over year.

U.S. consumer research firm NPD

even reported

that iPod unit sales fell 14% year over year in January, although this may have been prompted by the impending launch of the new iPod shuffle.

Apple is clearly looking to breathe new life into this part of its business with the latest addition to its product line.

By expanding its iPod family, Apple will also give its iTunes business an important boost, notably its App Store for downloading games and other applications. Although the company does not break out specific figures for this part of its operation, Apple says that more than 500 million applications have been downloaded since the App Store was opened in July 2008.

Although still in its infancy, the App Store has already

spawned imitators

from

Microsoft

(MSFT) - Get Report

,

smartphone rival

Research In Motion

(RIMM)

and a

handful

of other challengers.

Analysts are even speculating that sales from Apple's App Store could reach a billion dollars by the end of 2009, according to the

Apple Insider

Web site. Set against this backdrop, the launch of a new iPod should help Apple sell yet more applications to gadget-obsessed consumers.

Long term, opening up a billion-dollar revenue stream could only spell good news for the company, which recently posted first-quarter revenue of $10.17 billion.

The iPod's importance to Apple was underlined by the firm's

dogged pursuit

of former

IBM

(IBM) - Get Report

exec Mark Papermaster to head its iPod and iPhone engineering efforts, which resulted in a

high-profile legal dispute

.

Apple, which competes with the likes of

Hewlett Packard

(HPQ) - Get Report

,

Dell

(DELL) - Get Report

and

Nokia

(NOK) - Get Report

, is seen as one of the tech companies most likely to

withstand

the recession, but it is still subject to tightening IT spending.

In addition to its iPod efforts, the notoriously secretive company has also been

urged

to make cheap iPhones and

netbooks

top priorities for 2009.