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The report from American Technology Research (ATR) says that a new Nano is likely to appear in the fourth quarter of this year rather than the third as expected. It also says that video iPod, previously expected in the fourth quarter of 2006 may not appear until sometime in the first half of 2007, missing the crucial Christmas buying season.

Shares in Apple fell by 2.46 per cent on the release of the report to an eight-month low of $56.02, although they recovered a little in after hours trading. The iPod and iTunes franchises have become crucially important to Apple earning the company $3 billion verse $2 billion from software and personal computer sales.

The report says that Apple is having problems with the technology

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that underpins the wide screen vPod. It says that Apple is not only trying to increase the screen size but also improve battery life and notes that is a difficult trick to pull off both at the same time and requires 'significant engineering'.

The engineers at Apple are said to be exploring various options including adding a bigger battery, better power management and using both NAND flash and microdrives to cut power requirements. The ATR paper says that Bluetooth headphones may or may not make it to the final product.

ATR says the release of the new Nano is likely because Apple is changing from a system-on-chip (SOC) sourced from PortalPlayer to another supplier with an integrated audio/video co-processor that it suggests is likely to be Samsung. On the positive side ATR suggests that prices will remain the same but that storage capacities will double to 4Gb and 8Gb from the existing 2Gb and 4Gb models.

Oddly enough, ATR's analysis says that a delay in the release of new models could be of benefit to Apple as it will provide a better spacing for the product life cycles. The original Nano and vPod launches just a month apart at the end of 2005 created a surge in demand in the run up to Christmas but meant that Apple had no new models to show in 2006.

Apple would not comment on the report.