News.com discusses the possibility:
Apple is widely expected to announce a flash iPod at Macworld in January. But for now, the company has declined to comment.
Today, the flash market overall is larger in units than the hard-drive market, but it’s split among a number of players. The largest share of the U.S. retail market over the past year belongs to iRiver, followed by Rio and RCA. Other players include Nike/Phillips, Samsung and Creative Technologies.
NPD analyst Stephen Baker said that flash will carve out a larger slice of the market, likely forcing Apple’s hand.
“They have to get into it eventually,” he said. “If you look at the reasons for success of the (4GB iPod) mini and the price value curve in flash, at some point soon you’re going to get some flash players with some pretty hefty memory–2GB to 4GB–at price points that are between $149 and $199.”
Flash players, because of their lower prices, have proved more popular overseas than in the United States. Still, Baker questioned whether now is the right time for Apple to enter the flash player market.
“I’m not sure they need to go there now, given that the (iPod) mini’s only been out a year,” Baker said.
The 4GB to 5GB player is an area where the battle between flash and hard drive is likely to be most intense, as flash prices come down and capacities go up.