September 4, 2008

Apple Hints at Changes for iPods

Apple is expected to present new iPod music players, and possibly price cuts, at a media event next Tuesday but may not offer a long- awaited update to MacBook laptops until later.

Apple, which is based in Cupertino, California, e-mailed reporters an invitation to the event, "Let's Rock," that has an image of a man jumping in the air while listening to an iPod with the words "playing soon."

No further details were available from the company, which often sends provocative invitations to events that end up being product introductions. Creating an allure around its brand has only helped drive Apple's market capitalization above Google's, despite fears about the weak U.S. economy, which is slowing consumer purchases.

"It's got to be new iPods," Charles Wolf, an analyst for Needham, said. "That's 100 percent certain. The only question I cannot answer is whether they will also do new MacBooks."

Apple shares fell $3.34, or 2 percent, to close at $166.19 on Tuesday. But in early Wednesday trading, the shares were up $1.69, or 1 percent, at $167.88

Andrew Hargreaves, an analyst at Pacific Crest Securities, said the stock's decline Tuesday was probably a result of broad bearish sentiment rather than any disappointment related to the invitation. But Hargreaves said he expected any changes to the iPod to be incremental. "I'm not expecting anything revolutionary," he said.

Shaw Wu, an analyst at American Technology Research, said that the iPod line needed to be refreshed and that the price of the iPod Touch needed to be cut because it had a higher starting price than the iPhone, which has a mobile phone and other features not included in the iPod Touch.

The iPod Touch, which is Internet ready, starts at $299 in the United States, compared with $199 for the iPhone.

"Pricing needs to be adjusted downward toward market conditions," Wu said. "We are in a tougher economy. That's what makes most sense."

Analysts said they still expected Apple to refresh its MacBook laptops soon. Wolf and Hargreaves said they expected new MacBooks to be announced in the coming weeks, if not next Tuesday. In July, Steve Jobs, chief executive of Apple, said in a statement that the company was working on several products to introduce in the coming months, but executives declined to give details.

Originally published by Reuters.

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