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Wednesday, October 26, 2005, 11:00 am PT (02:00 pm ET)

iPod shuffle still selling well?

Information gathered from SigmaTel's quarterly filing implies that Apple's low-capacity iPod shuffle digital music players may still be selling well despite more feature-rich offerings introduced by the company over the past year.

SigmaTel supplies Apple with digital music decoder chips that are used inside the 512MB and 1GB iPod shuffles.

In a research note released to clients on Wednesday, American Technology Research analyst Shaw Wu said Asustek — Apple's overseas iPod shuffle manufacturing partner — accounted for 11% of SigmaTel's revenue during its recent quarter, representing a 31% increase quarter-to-quarter.

The analyst believes these results indicate that iPod shuffle sales "may be turning out better than expected," noting strong promotions and sales of the players through online mega-retailer Overstock.com.

Last week Overstock began advertising the iPod shuffle on its main page, discounting the 512MB shuffle to $89.99 and the 1GB to $109.99. In the past, Overstock has reportedly helped Apple move tens of thousands of iPods that were in Apple's inventory.

In a related note issued on Tuesday, Wu said checks with industry and channel sources revealed that demand for Apple's iPod nano now appears to be uniform, with sales of "whites" catching up with "blacks" and even 2GB models catch up with 4GB models.

The analyst also added that fifth-generation iPod video sales are off to a strong start, "with demand causing lead-times to stretch to one week and in some cases two weeks for black models."

Wu expects Apple to sell more than 9.4 million iPods in total during the three-month period ending December 31st.