Redesigned iPod nano due this fall

Industry contacts with a solid track record of predicting Apple's future music directions say the company, like last year, is shooting to introduce the player in September. While any comment on the device's external design aesthetics would be premature at this time, early engineering plans from the iPod maker signal a "significant internal redesign," these contacts says.

Of course the notion of a new flash memory-based iPod nano making its debut in time for the holiday season is nothing new, especially with PortalPlayer all but blowing the whistle on the subject last week.

In a message to its shareholders, the current iPod nano system-on-a-chip (SoC) supplier announced that it had not been selected to supply its chips for new flash-based iPods due in the second half of the year.

The news has re-ignited an industry-wide debate (or dilemma) over where Apple has or has not turned in its quest to select a more amicable replacement supplier. As ironic as it sounds, the Cupertino, Calif.-based company, which constantly seeks the tightest control of its intellectual property, could once again find itself in bed with Intel Corp.

Although Deborah Conrad, head of Intel's "Apple Group," recently implied that an Intel chip is unlikely to turn up in an iPod any time soon, she did tease of the potential for the two companies to collaborate on other products outside of Macintosh systems.

Still, that hasn't stopped Apple from evaluating Intel's chips, according to Wall Street analyst Shaw Wu, who last August noted that Apple was exploring the use of Intel's XScale embedded processors for future mobile devices like the iPod, along with SoCs from Broadcom and Sharp.

With the jury out on whether an Intel chip will make its way into a future iPod nano, analysts from WR Hambrecht have said that components from Synaptics appear to be a lock. In a report sent to clients earlier this month, analyst Daniel Amir said channel checks showed Synaptics beating out Cypress Semiconductor to supply click-wheel components for a new nano that is "likely to be released this fall."

In his report, Amir estimated the deal could add as much as $10 million to Synaptics' revenue in the second half of the year — suggesting Apple plans to ramp nano production to all-time highs. The report sent shares of Synaptics up $1.14, or some 4.7 percent.

Last year Apple battled component supply woes after dropping Synaptics as a supplier of the nano's click-wheel technology in favor of going its own route. The decision reportedly played a large roll in a shortage of iPods that hit resellers and customers during the end of the 2005 holiday shopping blitz.

After reinstating Synaptics to help supply components in mid-December, Apple eventually caught up with its iPod nano backlog in January. This year, sources say, the company is hoping to avoid even the slightest of debacles.