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Friday, November 12, 2004, 01:00 pm PT (04:00 pm ET)

Apple to begin manufacturing flash-based iPod next month

Flash-based iPod digital music player on tap for early 2005.

To his credit, Thomas Weisel analyst Jason Pflaum had this one nearly down pat.

Apple Computer in December will begin manufacturing a third variant of its flagship iPod music player, which will be based on solid-state flash memory, AppleInsider has confirmed through well placed and extremely reliable sources.

According to contacts in Asia, the computer company will build a stock-pile of approximately 2 million flash iPods before the product begins shipping world-wide in late-January or early February. The new players are slated to be announced at the annual Macworld trade show in San Francisco during the second week of January.

Though precise specifications were not readily available, the flash iPod will reportedly use controller chips from Austin, TX-based SigmaTel, and feature a storage capacity in the range of 256 Megabytes to 1 Gigabyte. Sources were unable to confirm if the player would be released in more than one configuration.

The iPod flash will retail for below (US)$200 and sport a similar user interface to the company's ubiquitous iPod and iPod mini.

Despite comments from Apple chief executive Steve Jobs that flash-based digital music players are often received as gifts, rarely used, and "end up in a drawer," market share figures speak for themselves. Although the iPod holds a whopping 92% slice of the pie for hard drive-based players, this figure shrinks to 65% when flash models are tallied as part of the mix.

Sales of flash players remain strong in the second half of 2004 and account for a larger percentage of digital music players than that of hard-drive music players when surveyed on a global basis. The introduction of an Apple-branded flash player is expected to increase Apple's share of players in the far east, where the adoption rate for the iPod has been feeble.

At last year's Macworld Expo in San Francisco, Jobs introduced the iPod mini, a 4 Gigabyte hard drive-based player designed to compete in the high-end flash player market. A renowned success, the iPod mini drew strong demand throughout the better part of the year, but priced at $249, it remains inaccessible to many.