Is iPod angling to be device du jour?

Apple unveiled a free update to its iPod software and a larger-capacity model of the device at Macworld Tokyo on Wednesday.

The software update lets iPod manage and synchronize contacts like the Palm and other handhelds, but it does not offer calendaring functions. The new 10GB iPod, with twice the capacity of the original, will sell for $499 and, combined with the new software and other hardware coming from third parties, could start to be used like a Palm or other handheld.

Part of iPod's allure as a multifunction device is its hard-drive capacity, roughly the same as budget PCs from just a few years ago, and the speed of FireWire connectivity, which transfers data up to 400mbps--fast enough for live video. In short, the device has the room to hold all sorts of software and data and the means to use it.

Already, a number of third-party developers have created software for extending iPod beyond music playing. Apple's addition of contact-management capabilities in part responds to what other companies already are offering for iPod, analysts say.

"To some extent Apple is co-opting to the reality of the marketplace, NPDTechworld analyst Stephen Baker said. "People are going to put those upgrades out there, and in some respect Apple has to support them. They would much rather do that from their own native software than from the software community run amok."

Software developers already had released applications that took iPod beyond digital music, such as with ipoAdres or iPod Organizer. ProVue's iPod Organizer offers many of the features found in Apple's update, such as the ability to manage contacts, but also offers access to other data.

Although many other early iPod adaptations focused on music, Griffin Technology has found an innovative use for the music player. In January at the Macworld Expo in San Francisco, the company showed off PodMate, an attachment that turns the iPod into a universal remote control.

Many iPod customers also found that the device could double as a portable hard drive for storing or transferring photos, video or other data files.

"If you look at the stalwart content-creation professionals, this gives them the opportunity to store video (and) images, and sort files and move them between laptop or computer at home to one at work or on the road," Technology Business Research analyst Tim Deal said. "It makes more intensive data types mobile."

But Apple doesn't see iPod morphing into a Palm-like device. The new software, developed by Apple, is there mostly as a convenience.

"We see it primarily as a music player," said Greg Joswiak, Apple's senior director of hardware product marketing. Joswiak said the company has no plans to add a calendar function, for instance. "It is still 100 percent a music player, but people say, 'I take my iPod everywhere,' and they want their contacts with them," he added.

Baker and other analysts aren't convinced that Apple or third-party developers won't respond to market demands for more, however.

"There's a reasonable expectation iPod could be a Trojan horse for them into the handheld market," Baker said.

IDC analyst Roger Kay agreed.

"It is clear that this is a very flexible and versatile device and that a lot of software can be loaded onto it that would make it a lot more exciting, like video and other personal information management tools," Kay said. "People are not used to having those kinds of capacities in that kind of size. It's a great price point, but it's the portability that makes iPod attractive."

Apple introduced the original iPod in late October and started shipping the music player a few weeks later. The company sold 125,000 units during its first fiscal 2002 quarter, ended Dec. 31.

Apple will continue selling the 5GB model at its original $399 price.

"I'm not sure the casual MP3 listener needs that much capacity, but without out a doubt, it will sell," Deal said. "You get twice as much capacity for only $100 more."

Nods for iPods
Many longtime Mac users think expanding iPod's capabilities well beyond playing digital music is the right thing for Apple to do.

"I have an iPod sitting next to me and sure hope they will add features," said Michael Edelstein, a 12-year Mac user from San Francisco. "I would buy an iPod digital still camera in a moment, for instance, and would love a video version when the hard drive is a bit bigger. I just bought the second-party software to use the iPod as an organizer, so again I knew something was likely coming along."

For Paul Hocker, a 15-year Mac user from San Francisco, the contact-management update is what he needs to do away with his Palm.

"I ordered a 5GB iPod an hour after they were announced," he said. "I love it and wouldn't trade it for the world...The only real useful thing a Palm does is keep your addresses and appointments neat and tidy. We're halfway there. Once (the contacts) are in the iPod, I'll have a Palm for sale. Besides, the iPod is smaller than a Palm. It actually fits in my pocket."

But Nick Elprin, a Mac user and student in Cambridge, Mass., is somewhat concerned about the direction Apple is taking iPod.

"I'm a bit wary of the contact-management stuff in the revised iPod," he said. "Apple has always stood apart from competitors by making things simple, doing one thing but doing it really well. This enhanced iPod disturbingly reminds me of a Microsoft bloatware product."

Despite some misgivings, Elprin said he doesn't think the enhancement would "interfere with the iPod's real strength as an MP3 player. I just hope Apple's feature additions don't get out of hand and destroy a product whose primary advantage is its simplicity."

But other Mac users see a twinkling of the past: Apple's much-loved but market-busted Newton handheld.

"The iPod is moving towards a PDA out of sheer momentum and wishful thinking after losing the Newton," said Paul Thomas Suerth, an 18-year Mac user from Knoxville, Tenn.

Deal believes that if Apple isn't thinking of making iPod like a handheld, the company eventually will.

"This MP3 player is metamorphosing into a handheld of sorts," he said. "They now have the option, through a software upgrade, to increase the value of an already popular product. That's pretty exciting and compelling."