Chicago (IL) - You know something is up when Apple’s PR team urges journalists to attend tomorrow's iPod event, pitching it as the "big deal." If we believe the blogosphere, then there aren’t many surprises left. We are expecting more storage space for iPods and price cuts. There will be the obligatory redesigns for the Nano and the Touch and perhaps a couple new features for some models. iTunes 8 will debut with a layout, grid view and a music recommendation engine and the iPhone/iPod touch 2.1 firmware also slated for release. So much for the boring announcements. Of course we hope there will be more – especially the rumored all-you-can-eat music subscription service for iTunes, which should be much more exciting that new shapes a colors for music and video players.  

The banners are up on the Yerba Buena Center in San Francisco where Apple is scheduled to hold a special "Let's Rock" event tomorrow morning. With only one day to go, the Apple rumor mill is shifting into high gear. Digg founder Kevin Rose launched the initial batch of rumors with some iPod Nano and iTunes 8 information bits. Rose's earlier track left room for doubt, supported by American Technology Research analyst Shaw Wu who warned clients about and "underwhelming" Apple event. Made sense to us, since recent Apple events offered very few surprises.

However, it seems that the common trend has returned to Rose's original predictions.

The hardware

On the hardware side, iPods are set for price cuts and jump in storage across the entire line. The iPod touch is set for cosmetic changes, possibly rounded design to keep up with iPhone 3G's looks, according to the iPod lounge. The touch-based music player will also see price cuts to distance itself from the $199 iPhone 3G. The new taller iPod Nano is likely to be the star of the show.

The latest leaked photos lead us to believe that Nano's tall, elongated appearance is certain. It is believed to measure 90.75 × 38.75 × 6.08 millimeters and will come in new vibrant colors (namely orange and lime), in contrast to the pastel color scheme of the current generation. This new photo of a Nano looks genuine enough to us. It is in line with Rose's earlier predictions as well as the shape of Nano 4G slipcovers.

The software

iTunes 8 and iPod touch 2.1 software may be two key highlights of the show. The latter comes as a bit of surprise, since Jobs previously said that the iPhone 2.1 firmware will arrive in October. 3G connectivity issues have snowballed into a PR disaster, which may have convinced Apple to release the firmware earlier. Rose believes that Apple will introduce the 2.1 firmware only for the iPod Touch tomorrow – and follow-up with an iPhone version later. We believe this is rather unlikely - it would be the first time that the iPod touch gets the firmware update before the iPhone. Industry sources contacted by TG Daily indicated that the 2.1 firmware for both devices will be introduced and released during tomorrow's event.

Besides previously reported features, such as directional GPS that could enable turn-by-turn navigation applications, the 2.1 firmware is expected to support new features that were removed from developer seeds to prevent premature leaks. For example, Apple pulled a previously announced notification API from the latest 2.1 firmware developer builds. The notification API will allow third-party applications to receive background notifications even if applications aren’t running – feature that is required for IM applications.

iTunes 8 is pretty much a done deal. According to an unconfirmed UFailPix.com reader post, Apple apparently made pre-release version of iTunes 8 briefly available on its homepage, but removed it just moments later.

Most sources tend to agree with the iTunes 8 feature set pointed out by Rose, namely the new Magnetosphere visualizer, a grid view, an introduction of high-definition video downloads, the Genius music recommendation engine with the Genius Sidebar. Many speculate that the iTunes "tripy" visualizer, as Rose described it, is in fact Flight 404's Magnetosphere music visualization software (watch the video). The free software was recently removed since "a third party" acquired the software, the developer said. Kevin Rose noted that Magnetosphere will be the new visualizer in the iTunes 8.

The new grid view will enable users to "browse artists and albums visually," Rose said. The new Genius music recommendation engine will automatically create a smart playlist. It will include vertically aligned Genius sidebar that will recommend songs from the iTunes Store that you don't already have, which could indicate that the new sidebar will replace the Mini-Store feature that offers a similar functionality.

The online store

High-definition video downloads are particularly interesting since HD movie rentals are mostly limited to the Apple TV device. Apple introduced movie rentals this January, but quickly moved to expand the offered content to include movies from all major film studios. There was a deal with content owners that made movie purchases and rentals available the same day as DVD releases. The company subsequently brought movies to New Zealand and Australia, France, Canada, Germany and the UK, and introduced local premium television programming in Australia. Apple included HBO programming, but it also lost NBC shows over pricing disputes with the network.

Although a music subscription service is suspiciously absent from the latest batch of iTunes Store-related rumors, apparently due to licensing difficulties with labels, there is chatter among industry sources that Apple is close to be unveiling this feature. Sold in a retail box like a MobileMe subscription, the new subscription service will offer an unlimited access to the iTunes Store music catalogue for $129.99 a year. It will be also available at a reduced $99.99 a year price for existing MobileMe customers.

Our take

Apple secrets are not what they used to be. The company may be leaking information intentionally or it may just have a hard time guiding its secrets. It appears that the event tomorrow may offer very few surprises and turn out to be business as usual – with the exception of an iTunes subscription service, which is still somewhat mysterious. But it makes sense for Apple to make such move, especially now that other online stores are offering DRM-free music from more labels than the iTunes Store.