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Wednesday, August 29, 2007, 07:00 am PT (10:00 am ET)

Apple focusing its business segments around Mac OS X - analyst

While some industry watchers have argued that Apple is diversifying its business too dramatically, analysts at investment research firm Piper Jaffray said Wednesday they believe the company is actually preparing to more closely focus its business and consumer electronics segments around the central core of its Mac OS X operating system.

Reacting to Apple's just-announced media event next Wednesday, analyst Gene Munster and his research team said the Cupertino-based firm appears ripe to usher in its holiday iPod offerings during the event, which are likely to include radical redesigns of the flagship video iPod and iPod nano.

"We expect that the new pods will be based on a modified version of Apple's operating system, OS X. Currently, Macs, the iPhone, and Apple TV run on OS X, and with these OS X-based iPods, Apple would have an entire line of consumer electronics products based on OS X," Munster wrote in a note to clients. "Instead of diversifying its business too dramatically, as some have argued, we believe Apple is focusing its business."

A third-generation iPod nano is likely to include video capabilities, a wider viewing display, and come in five new colors, the analyst said. However, he isn't expecting major advancements in storage capacity, which he believes will remain at 2GB to 8GB. He added that Apple will likely maintain its lowest price point of $149 for the new nanos.

Meanwhile, Munster said he's less certain about the specifications of a sixth-generation iPod video player, but believes there is a 70 percent likelihood Apple will finally unveil a widescreen, mutli-touch model akin to the iPhone.

"It may also have WiFi capability and the capacity could be as high as 160GB," he told clients. "Apple will likely raise the lowest iPod price point back up to $299 (from $249). The fifth-gen iPod is the longest-lasting iPod model ever; it was released nearly 2 years ago and refreshed with high capacities and a lower price last September."

Speaking more generally in his note to clients Wednesday, the Piper Jaffray analyst also emphasized his belief that Apple is entering the two strongest quarters in company history.

"With new iMacs ahead of the education buying season, we believe Apple may see upside to our estimate of 1.9 million Macs in the September quarter," he wrote. "Likewise, if Apple announces new iPods on September 5, they would be well-timed for the critical holiday shopping season, possibly providing upside to our estimate of 22 million iPods in the December quarter."

Munster maintained his "Outperform" rating on shares of Apple with a price target of $211 a share.