Piper Jaffray echos 5GB iPod mini reports

Following AppleInsider reports from earlier this month, research firm Piper Jaffray said this week it believes Apple will increase the capacity of the iPod mini MP3 player to 5GB from 4GB at the Macworld conference during the second week of January.

In a note to clients, the firm said the storage bump would make the iPod mini more competitive with the Pocket Digital Jukebox from Dell and the Rio Carbon player, which both sport 5GB capacities. Piper Jaffray also predicts that Apple will launch a flashed-based iPod and an embedded iTunes application that will run on a new breed of Motorola cell phones.

According to AppleInsider sources, both of these new Apple iPod players are already in production in Asia. Sources also say Apple has enlisted Seagate Technologies, a worldwide leader in hard disk design and manufacturing, as its supplier of 1-inch 5GB microdrives. The company's current iPod mini uses 4GB 1-inch drives from component supplier, Hitachi.

But one of the hottest rumors lately is that Apple, in an effort to keep up with holiday demand, may have already started to use Seagate's 1-inch 5G microdrives in currently shipping iPod minis. These players reportedly look and feel identical to the original iPod mini and employ a firmware block that restricts functional capacity to 4GB. This move may have stemmed from an inadequate supply of 4GB drives from Hitachi, sources said.

Piper Jaffray continues to uphold an "outperform" rating on Apple, reiterating confidence that the popularity of the iPod will help motivate PC users to migrate to the Macintosh platform over the next two years.