Apple updates--and shrinks--iPod shuffle

Apple on Wednesday updated the iPod shuffle, shrinking it and adding a feature that will speak your song titles, artists and playlist names.

The third generation iPod shuffle is "significantly smaller than a AA battery," according to a statement. The latest iPod shuffle is also half the size of the last generation and has 4GB of storage. That's good news and bad news. The good news is that it's so small. The bad news is that it's small enough to lose even more iPod shuffles now (I just lost mine).

The iPod shuffle holds 1,000 songs and puts the controls on the earphone cord, which makes go hmm since I never use Apple's earphones.

The voice feature is dubbed VoiceOver and it's roughly the same robot that's yapping on the Kindle 2. The robot sounds different depending on whether you sync to your Mac or PC.

The iPod shuffle, which has up to 10 hours of battery life, is available now and retails for $79.

See Gallery: Tiniest iPod shuffle talks

Update: In a research note, Piper Jaffray analyst Gene Munster said:

Pricing on the new 4GB shuffle is up to $79 from $49 (+61%); we believe the new features will drive higher iPod units in FY09 and the higher price will drive increased iPod revenue with a higher margin. While this is Apple's lowest-priced iPod, we also believe it carries a higher margin than the iPods with screens and buttons. We are increasing our iPod estimate of 9.5m in the March quarter to 10.0m and our FY09 GAAP EPS estimate from $5.06 to $5.09.

Munster added that the iPod shuffle innovation is an encouraging sign given a disappointing Macworld.