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Thursday, July 06, 2006, 01:00 pm PT (04:00 pm ET)

Apple seen countering Microsoft with wireless iPod

Microsoft Corp. may have plans to debut a wireless digital music player this year, but likely so does Apple Computer, say one Wall Street analyst.

In a research note released to clients this week, PiperJaffray analyst Gene Munster said he also sees a wireless iPod making its debut from Apple.

"Apple has stated that ease of use is a key element of the iPod, so wireless functionality is an obvious next step for the product line," Munster wrote. "Apple has also stated that the pace of iPod innovation will not change."

Historically, Apple has released two new iPods each year. "But Apple has yet to release a new iPod this year," Munster added. "Based on these two factors, we expect a new wireless iPod this fall."

While acknowledging that there has recently been a lot of talk about Microsoft's new wireless MP3 player, the analyst said he does not believe the yet-to-be-seen offering will be a worthy opponent for the iPod.

"One significant indication is that Windows Media-enabled MP3 players have been in the market for three years and have been unable to grow their roughly 25 percent market share," he wrote. "Additionally, we expect Apple will release a new iPod this fall that will likely focus on ease of use, including wireless connectivity."

Munster remains bullish on shares of Apple, rating them "Outperform" with a price target of $99.