Apple looks to holidays in iPod Touch price cut

Apple chief Steve Jobs displayed a thinner iPod Touch yesterday. (ROBERT GALBRAITH/REUTERS)

SAN FRANCISCO - Apple Inc. chief executive Steve Jobs introduced slimmer iPod media players and cut the price on the touch-screen model 23 percent, appealing to cost-conscious consumers before the holiday shopping season.

A sleeker version of the 8-gigabyte iPod Touch will sell for $229, compared with $299 before, Jobs said yesterday. The stock dropped 4 percent, the most in more than a month, after the changes failed to captivate some investors.

"There was nothing revolutionary," said Andrew Silverberg, vice president and portfolio manager for Alger Large Cap Growth Fund. "The news is what people were expecting. We have seen these kinds of sell-offs before after other Apple events." The fund held almost 70,000 Apple shares as of July.

Jobs, 53, has relied on iPods to spur holiday demand in what is typically Apple's biggest period for sales. Cheaper models may help win over US consumers, who have cut budgets to cope with rising oil and food prices. Piper Jaffray & Co. analyst Gene Munster said he expected a bigger price cut for the iPod Touch.

Jobs, clad in his trademark jeans and black turtleneck, also introduced iPod Nanos that offer twice the storage at the same price as existing models.

Jobs told cable network CNBC that he is healthy even though he "could stand to gain 10 to 15 pounds," reporter Jim Goldman said. Some investors had speculated he might be ill again after he had a successful surgery to treat pancreatic cancer in 2004.

"Just the fact that Steve Jobs was up there was a positive," said Munster, based in Minneapolis.

Apple, based in Cupertino, Calif., fell $6.24 to $151.68 yesterday in Nasdaq Stock Market trading, the biggest decline since July 28. Shares have dropped 23 percent this year.

Jobs also said shows from General Electric Co.'s NBC Universal will return to Apple's iTunes music store, and that the site will add high-definition television shows for $2.99. NBC Universal let its deal with iTunes expire last year.

A 16-gigabyte version of the iPod Touch, which uses the same color touch-screen as the iPhone, will sell for $299, compared with $399 at its introduction last year. A device with double that storage will cost $399.

The pricing and capacity changes signal Apple is "being aggressive," marketing chief Philip Schiller said in an interview.

Apple introduced the latest iPhone in July, priced at $199 for an 8-gigabyte model. The company plans to release a software update this week that should ease problems with dropped phone calls and application crashes, Jobs said.

Customers can now buy a Nano with 8 gigabytes of storage for $149 or a 16-gigabyte model for $199.

"We think we've got the best lineup we've ever had for this holiday season," Jobs said.