Jobs unveils Apple's "thinnest" iPod

SAN FRANCISCO (Reuters) - A thin and smiling Apple Inc Chief Executive Steve Jobs launched a much thinner, curved iPod nano music player and joked about the state of his much-discussed health on Tuesday.

But shares of Apple fell more than 4 percent after the presentation, which had no major surprises for investors, amid a broad decline in the stock market. Apple last week invited reporters to a music-related event, stoking expectations of new players. Some had hoped for new computers as well as iPods, but that did not happen.

Jobs appeared thin but jaunty as he walked around the stage in his trademark outfit of jeans and long-sleeve black shirt in front of a screen that flashed "The reports of my death are greatly exaggerated" -- a quotation borrowed from Mark Twain.

Jobs introduced a curved aluminum and glass nano -- the best-selling iPod -- for $149 with 8 gigabytes of storage, $50 less than the predecessor model and a 16-gigabyte version for $199, capable of playing back 24 hours of music or four hours of video. He also showed off a thinner, $229 version of the Web-connected iPod Touch with rounded edges and 8 gigabytes of storage. At the high end, Apple is charging $399 for 32 gigabytes.

Apple dominates personal digital music players, with nearly three-quarters of the U.S. market in July, Jobs said, adding the product line-up was strong for the gift-giving season.

Even so, the company faces consumers jittery in the face of a sluggish economy. Jobs himself was mostly optimistic about Apple's position in the economy.

"I'm not an economist, I don't know if it's going to get better or worse, but I think Apple's faring reasonably well," he told CNBC after the event, a view matched by analysts.

"According to our data the overall category has been slowing, but Apple continues to do very well in the category." said Ross Rubin of the U.S. market-tracker NPD Group,

Michael Gartenberg of Jupiter said the new offerings could translate into "a very nice fourth quarter". Van Baker of Gartner agreed and praised the breadth of the line: "They've got everything covered from $50 to $400."

And Michael Abramsky, of RBC Capital Markets, said that the new nano "in the flesh is certainly more appealing than it's been. It was expected, but I think it will sell well in the holiday season."

He added that Jobs did not look much different from June, when his gaunt frame drew speculation of a recurrence of cancer or other problems and unnerved investors who see him as crucial to the success of the company. Other analysts declined to comment.

DEATH REPORTS EXAGGERATED

In 2004, Jobs, 53, said he had undergone successful surgery to remove a rare type of pancreatic cancer.

Bloomberg News erroneously published a Jobs obituary recently, while investors for months have been concerned about the cancer survivor's health after he appeared gaunt at another product launch in June.

Apple Marketing chief Philip Schiller said video games have emerged as the first big category of applications on the iPhone and iPod Touch. He said 700 of the roughly 3,000 applications sold on Apple's AppStore were games, the largest software category.

"Apple tends not to think in terms of demographics," Schiller told Reuters in an interview. But he added: "You are likely to see more people using iPod nano than a Touch in athletics. If you are a kid who plays lots of games, perhaps you would be more likely to own a Touch."

Apple also said the new nano has a "shake to shuffle" feature that changes songs as the player itself is jiggled and that General Electric Co's television broadcaster, NBC, had rejoined online video and music store iTunes.

Apple stock closed down $6.24, about 4 percent, at $151.68.

The stock had been off just over $40, or a little over 20 percent in the year-to-date, but has weathered the sell-off in stocks tied to the U.S. credit crunch far better than most other shares, including many technology names.

By contrast, Google Inc is off almost 40 percent this year. Rival Research in Motion Ltd, maker of the Blackberry is down only 9 percent in 2008 on Nasdaq.

Shaun Collins, an analyst with CCS Insight, who attended a simultaneous event in London, rendered his succinct verdict:

"Interesting, but underwhelming."

(Reporting by David Lawsky and Eric Auchard, additional reporting by Georgina Prodhan in London, writing by Peter Henderson, editing by Derek Caney, Andre Grenon and Carol Bishopric)

(Additional reporting by Sue Zeidler in Los Angeles; editing by Carol Bishopric)