News 

Piper Jaffray's Gene Munster expects shuffle sales to increase by around 15% but the lower average selling price will mean that it will have little if any impact on Apple's bottom line. But it will put another 500,000 to one million iPods in circulation

Shaw Wu believes that simply by inflating iPod sales figures the price cut will reassure investors even if it doesn't boost revenues.

"We view this development as an incremental

ADVERTISEMENT

positive that helps eliminate one of the key risks lingering from its December quarter, namely that being light iPod units (we think from poor low-end shuffle sales) caused Apple to miss consensus shipments by 2-3 million," the American Technology Research analyst wrote in a note to investors.

But adds that the cut would have been more welcome in the last quarter.

"We would have preferred Apple cutting shuffle prices last quarter as we believe this would have likely made up for the shortfall (or at the very least narrowed it)," he wrote. "We are strong believers in the school of thought that there is elasticity in demand for goods and services (in this case iPods), meaning lower price points will typically bring in a new class of buyers, thus driving incremental demand."

Munster agrees with Apple that the new generation of touchscreen, internet-enabled iPods will provide future growth. He anticipates year-on year iPod sales growth to be around 15% this year, compared to just 5% in the last quarter.