This is a very speculative story as it is based on a source that can’t be confirmed, but according to ‘Eye on Apple‘ there are plans for a new media device from Apple that will be based on the Nano but feature touchscreen functionality.
The new iPod would be a mid sized player, perhaps a new generation iPod Nano or similar, but according to the source this rumor becomes more credible with Apple’s desire to create an entry level iPhone as well.
It is no surprise that Apple will be looking to further develop the touchscreen technology to use it on smaller devices such as the iPod Nano as well. The problem becomes the surface available to work on and the functionality of the technology. The device mentioned might be about the size of the second generation iPod Nano and feature a split screen where the touchscreen navigation will take place on the lower third of the screen, replacing the clickwheel. It is also rumored that Apple might follow the strategy they used with the joint launch of the iPod Touch with the iPod Classic, by launching an upgraded iPod Nano together with the touchscreen iPod Nano version.
It is expected that this new generation iPod might be in the market sometime around end of 2008 or in time for Macworld 2009.
Once we get any more confirmed sources and information on this we will come back with more information, and hopefully some working model pictures.