Apple to refresh iPod line, say analysts

An iTunes subscription plan and new MacBooks are both outside bets

Apple Inc. will refresh its iPod line on Tuesday at an event in San Francisco, but it is unclear whether the company will spring anything else on customers, analysts said today.

The event, which Apple has touted with the tag line "Let's Rock" in invitations to journalists and bloggers, will kick off at 1 p.m. EDT.

"We certainly have a good sense that it's a music event," said Michael Gartenberg, formerly an analyst at JupiterResearch and now a vice president of mobile strategy at JupiterMedia. "And the fall is traditionally when Apple has done a refresh of its iPod line."

Ezra Gottheil, an analyst at Technology Business Research Inc., seconded the music angle but was more specific. "They'll probably bring down the price of the iPod Touch to make it more appropriately priced in comparison with the iPhone," said Gottheil.

The iPod Touch is currently priced at $299 for the 8GB model, $399 for the 16GB and $499 for the 32GB device. The iPhone 3G, meanwhile, costs $199 for the 8GB model and $299 for the 16GB, although users are required to ink a two-year contract with AT&T Inc.

Gartenberg and Gottheil were hesitant to predict what Apple will unveil other than revamping the iPod line; most speculation has centered on a redesign of the iPod Nano.

"They may be able to talk about a subscription service for the iPod at this point," said Gottheil. "That would depend on whether they have been able to make deals with the labels."

Talk of a flat-fee, unlimited-access plan for iTunes has surfaced before, most recently last May when the U.K.-based Financial Times reported that Apple had been in discussions with major music labels about such a plan, which would be tied to purchases of new iPods.

Both analysts acknowledged that if Apple limits tomorrow's announcements to the iPod, it risks underwhelming users, who have come to expect more than the usual from the company's launch events. "New iPods won't necessarily shake up the market in terms of expectations," said Gartenberg.

"They're basically working with a saturated market," added Gottheil. "There's really no trick that they can pull to change that."

Still, both Gartenberg and Gottheil gave Apple the benefit of the doubt, noting that computer and consumer electronics maker has a history of dropping bombshells. "They could announce something in the notebook field," said Gottheil, referring to Apple's MacBook and MacBook Pro lines, "though they have their back-to-school promotion running through next week." That promotion, which ends Sept. 15, offers customers rebates of up to $299 to put toward the purchase of an iPod Touch or iPod Nano after buying a qualifying Mac.

Apple has introduced other products at the same time it has announced changes to the iPod line, Gartenberg said. "They hinted last July that we'd be seeing new products this quarter," he noted.

When Apple released its second-quarter financials in July, Peter Oppenheimer, the company's chief financial officer, said that a "product transition" in the next quarter would significantly reduce its profit margin, talk that set off speculation that the company would have to debut some major redesigns of existing hardware or unveil something markedly different to actually affect its bottom line.

"Remember, it's still early September," said Gartenberg. "There's a lot of time between now and the end of the quarter."

"I still think that there's a significant notebook refresh coming later this fall after the back-to-school promotion ends," said Gottheil.

"The question is, will there be other things besides iPods that we'll see tomorrow?" Gartenberg said. "Will there be that 'Oh, one more thing' moment from Steve Jobs?"

Computerworld blogger Seth Weintraub has also tossed his predictions into the ring. Among them: the release of an iPhone/iPod Touch software update and the launch of iTunes 8, featuring a personal music recommendation system.

Copyright © 2008 IDG Communications, Inc.

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