As widely expected, Apple Computer on Tuesday introduced a new version of its popular music player. Dubbed the iPod Shuffle, it comes in two sizes, priced at just AU$149 and AU$229, and capable of holding about 120 and 240 songs, respectively. Both models are expected to be available in Australia within two weeks.
Based on flash memory, rather than the more expensive computer-like hard drives that have been the centerpiece of all other iPods, the new player is aimed at a low-end segment of the market, which has been untapped largely for Apple to date. The smaller iPod Shuffe has 512MB of storage, the other offers 1GB.
Unlike most similar devices, the Shuffle has no display screen to show songs or playlists; it consists only of a slender white rectangle with the trademark iPod navigation wheel on one side. The company is instead highlighting the random-play aspect of the device, although this is a common feature on virtually all MP3 players.
"iPod Shuffle is smaller and lighter than a pack of gum," Apple CEO Steve Jobs said in a statement. "With most flash-memory music players, users must use tiny displays and complicated controls to find their music. With iPod Shuffle, you just relax and it serves up new combinations of your music every time you listen."
Although widely expected following a series of leaks, Apple's move into the flash market does mark a departure from the company's previous high-end strategy. Jobs has previously dismissed small-capacity, relatively inexpensive MP3 players as products given as gifts and rarely used.
The flash market overall has been larger in terms of units sold than the hard-drive market, and remains very strong overseas. The largest share of the U.S. retail market over the past year belongs to iRiver, followed by Rio and RCA. Other players include Nike/Phillips, Samsung and Creative Technologies.
The holiday season proved a successful one for some of these Apple rivals. Creative Technology said Tuesday that it had sold more than 2 million MP3 players in the quarter ending December, prompting the company to raise its yearly revenue guidance substantially.
However, Apple remains the dominant player in the hard-drive-based MP3 player market, accounting for more than 80 percent of sales between October 2003 and October 2004, according to the NPD Group. The company said on Tuesday that it had sold more than 4.5 million iPods in the fiscal quarter ending Decemeber 25.
Analysts said the new device will help Apple capture a new segment of the market without cutting into the older iPod's growth.
"The shuffle is where it needs to be--it is very unlikely to cannibalise the iPod while allowing Apple to be more aggressive with other flash players," said NPD Techworld analyst Steve Baker. "It also allows Apple to tap into overseas markets better where people are more sensitive to price points than here in the U.S."
The company's share prices have soared from US$40 to nearly US$70 in the last three months, largely on expectations of continued iPod sales growth and associated positive effects on the rest of the company's business. The Prudential Equity Group said Tuesday that it expects Apple to ship 15 million iPod units in fiscal 2005 and 22.5 million units in fiscal 2006.
The decision to eliminate the navigation screen, which will make it more difficult to find a specific song, drew mixed reviews from analysts. The device still retains a skip-and-rewind button to move forward and backward through a playlist, and a switch to toggle between shuffle and in-order play.
"It is likely that they omitted the screen in order to keep (the) retail price down," said IDC analyst Susan Kevorkian. "But looking to next-generation flash players, they're going to need to add the ease of navigation that comes with a display."
Competitors also noted this feature as a competitive advantage for their own products.
"We have seen this in the industry before, where we've gone down the path of blind (user interfaces), and customers don't respond well," said Dan Torres, vice president of product marketing for Rio. "There is that comfort where customers will look at the screen and say, 'What song am I on,' or 'What do I have queued up?' Navigation is important visually as well."
Despite fevered speculation Apple Australia was planning to announce today the launch of an iTunes music store in this country -- with some pundits claiming a statement was being prepared to coincide with the MacWorld conference in the US -- nothing eventuated.
ZDNet Australia's Kristyn Maslog-Levis contributed to this story.
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