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Nano update cements Apple's midmarket hold

By adding important features to the iPod Nano while keeping the price low, the company is sewing up its domination of the middle of the MP3 market.

Today's Apple event contained a number of newsworthy announcements--a new digital-album format, precut ringtones at $1.29--but what's more striking is the way that the company really focused the improvements on the iPod Nano.

The Nano was the only Apple device that got a significant overhaul, with a video camera, FM radio, voice recorder, and pedometer. Somewhat surprisingly, the more expensive and higher-end iPod Touch isn't getting a refresh this time around. It still lacks a video camera and built-in FM radio.

It's what's in back that counts. Apple

Strategically, this makes sense: on stage, Steve Jobs claimed that the Nano has sold more than 100 million units, making it the most popular MP3 player in the world. It occupies the sweet spot in price, between $100 and $200 (the new 8GB version will be $149, while the new 16GB version will cost $179).

Last year, Apple hardly updated the Nano at all, besides introducing a few new colors. So to keep its firm hold on the midmarket, Apple was smart to add a few checklist features, particularly the video camera, which suddenly makes the Flip look overpriced.

At the low end, the Shuffle got a price cut to $59 for the 2GB version or $79 for the 4GB version, but this seems expensive, compared with SanDisk's Sansa Clip+, which costs $40 for a 2GB or $50 for 4GB, and includes an FM radio, small screen for navigating menus, and expandable memory via a microSD slot. Here, Apple seems to be relying on the iPod brand to carry it.

At the high end, the iPod Touch remains one of the most exciting devices on the market--it's basically redefining portable computing, thanks to its Wi-Fi connection and Apple's massive App Store. But as a pure MP3 player, I still think that there's room for competition.

Microsoft's forthcoming Zune HD might grab some hard-core music fanatics, thanks to its built-in HD radio (more stations), all-you-can-play subscription service, and (in my opinion) better navigation scheme that lets you get to more of your music more quickly. The Zune HD also looks like a better deal on a straight-memory basis--the 16GB version will cost $220 (only $21 more than an 8GB iPod Touch), and the 32GB will cost $290, which is $9 less than the equivalent iPod Touch.

If I were shopping for an MP3 player today and had less than $100 to spend, I'd buy a Clip+. If I had between $100 and $200, the iPod Nano is the obvious choice. If I had more than that, I'd have to weigh whether I'm more interested in a broad range of apps (iPod Touch) or music (which might sway me to the Zune HD).