Apple is readying product updates to its iPod nano line that could double its capacity and add video support by September, according to research firm American Technology. Maintaining its "buy" rating on Apple stock along with a $101 price target, the firm circulated a research note that its aging iPod nano product line would receive upgraded storage capacity and basic video support to help differentiate the popular music players from its competitors. "We continue to believe that the iPod nano is in need of a refresh with either an increase in storage capacities and/or price cuts to regenerate interest. Our most recent checks indicate that the current 2GB and 4GB models will see their storage doubled to 4GB and 8GB capacities," analyst Shaw Wu told clients.

"We anticipate these new Nanos will become available in the September quarter and become top sellers, particularly if AAPL keeps its price points low at $199 and $249," Wu said.

In addition, the firm says that Apple was on track to ship a low-cost Intel-based laptop early this summer as a replacement for the PowerPC-based iBook.

"We view this as an important release as [the] iBook is the second most important volume product in the Mac business," Wu wrote in his research note. "This is in time for the back-to-school selling season that starts in July."

Apple is also said to be working hard on extending the battery life on its next-generation "widescreen vPod," according to the analyst. Rumors of the next-generation iPod have surfaced over the past several months, however, Apple has not provided any details or indication of when it would replace its high-end iPod. Wu said that the technical issues, however, would not prevent the company from releasing the upgraded iPod by the December quarter.

Apple's current fifth-generation video iPods have a battery life of only 75-90 minutes when playing video.

Wu's research indicates, however, Apple is exploring different ways to improve battery life, including the use of more efficient software, offering a larger battery, or using a combination of flash memory and microdrives. He also said that Apple may or may not include Bluetooth headphones with the upgrade.

"We remain firm believers that the move to digital entertainment is a multi-year trend and that Apple is well-positioned to capitalize with its unique and defendable iPod + iTunes and Macintosh franchise," Wu wrote.