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New iPod Nanos Will Be Delayed

Apple's stock price fell yesterday after a Wall Street analyst warned that the company would be late in shipping its new iPod Nano. The stock dropped to an eight-month low following the report from American Technology Research analyst Shaw Wu.
While Wu reduced his target for Apple's stock price from $101 to $75, he actually recommended that investors buy Apple shares. He said in the report that he believes Apple is "well-positioned with arguably the industry's most powerful & integrated stack of hardware, software, and service."

Wu did warn, however, that the upgraded versions of the iPod Nano would ship in the final quarter of this year -- instead of the third quarter -- as a result of Apple's change of manufacturer. He also indicated that Apple is unlikely to increase its prices for iPod Nanos, although storage capacity will double to 4 GB and 8 GB, up from 2 GB & 4 GB.

Change of Supplier
The American Technology Research analyst also warned that the launch of a widescreen video iPod, which had been expected to debut in the fourth quarter of 2006, likely will be delayed until the first six months of 2007.

Wu cited battery life as the likely reason for the delay. "[Apple] is aiming to increase both the screen size and improve the battery life -- two conflicting attributes that are difficult to improve simultaneously and require significant engineering," Wu wrote.

Nitin Gupta, a Yankee Group analyst, said he was not overly concerned that Apple would lose market share as a result of any delays.

"I don't see millions of people rushing out and buying players with bigger storage capacity from Apple's rivals, just because the new iPod Nanos are late," Gupta said. "Apple is still the largest player in the music player market, and its closest competitors are nowhere near it in terms of market share."

Information Source

Gupta conceded that, due to the long time since the last iPod Nano was released in October 2005, Apple's rivals have been able to come out with products with more storage capacity than the iPod Nano.

"For example, SansDisk's Sansa music players offer more capacity than the iPod Nano," he said. "So Apple could lose some market share to firms such as SansDisk or Archos if it is late, but it won't be a big drop in market share."

Gupta stressed that he was neither confirming nor denying the report from Wu. "Market research firms such as Yankee Group will never comment on whether they believe a Wall Street analyst's report is correct," Gupta said. "All we will do is to speculate on the likely consequences of such a report being accurate."

A Gartner Group analyst, who declined to be identified by name, questioned where Wu had obtained his information about Apple. "Did he speak to Apple or to its supplier?" he asked. "I would not give too much credence to any rumors emanating from the channel."

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