The Rundown: New iPhone, iPod Touch

Posted by: Arik Hesseldahl on February 05

Apple boosted the maximum storage capacity on both the iPhone and the iPod Touch today. The top end of the iPhone family now comes in at 16 gigabytes, and sells for $499, while the 8GB model remains on the shelves, and will continue to sell for $399.

The iPod Touch now tops out at 32GB for $499, while the 16GB version is still selling for $399, and the 8GB version for $299.

The higher capacities will come in handy, particularly if you’re using Apple’s new iTunes movie rental service. The higher capacity of the touch in particular — which uses flash memory chips instead of a hard drive — is interesting because at 32 GB, it’s nearly as high as the 40GB hard-drive based model, which until late 2005 was the highest capacity available. (For the record, the highest capacity model period is the 160GB iPod classic, which is what I’m using these days.)

I just got off the phone with Apple VC Greg Joswiak, and I asked him if it was fair to consider the touch as the flagship device in the iPod family these days, and he agreed with that, calling it a “very strategic product for us.” But he said not read too much into that stance in regard to the hard-drive based iPod, the classic, which suggests to me that it will be with us for awhile to come.

Apple stock traded up $1.23 as of 10:15 AM EST.

Update: Well that positive reaction certainly didn’t last. Apple stock finished the day down $2.29 or nearly 2%. The sentiment is coming first from the general market concerns. When the Dow falls 370, that’s not good news for anyone. But there’s something Apple specific here: Why wasn’t this news worked into the MacWorld keynote?

Apple and Jobs have been criticized for a keynote that was light on product introductions: The MacBook Air was the highlight (Even though I think history will judge AppleTV version 2 as the highlight, though that is not clear yet) and movie rentals on iTunes. If it was light on news, new iPhones and iPod touches would have been a nice addition, no?

Well, maybe not. If the product pipeline at Apple is a little anemic at the moment, then it pays to space out the incremental announcements like the ones today outside the overhyped confines of the MacWorld keynote.

I think one thing today’s news telegraphs is that the second-generation iPhone isn’t going to appear by summer as many including myself have guessed — somewhat arbitrarily — that it might. I’m beginning to think that iPhone 2.0 can’t appear before the fall, and may not see the light of day this year. I may be wrong, but I don’t think an upgrade such as today’s would happen if a new iPhone were only four to six month away. Six to nine months? Maybe. That would push it toward the fall, and Apple typically upgrades the iPod line in the fall right as school is starting and holiday shopping is nearly underway. That could make some sense. Labor Day is about seven months away.

The next logical window would be MacWorld 2009. This too would make sense, because my understanding of the issue is that getting the 3G wireless chips to work within the kind of power envelope that would give a new iPhone realistic battery life is a big challenge, one that’s going to take some time to bring under control.

Either way, the market didn’t take kindly to the news today, and investors are looking at Apple, long known for its perfect-timing on product releases, and for the moment, not liking what it sees.

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