While the iPod has become a mature product and Apple and the world’s attention has shifted to the iPhone and iPod touch, the product range seems set to attract 20 million Windows switchers in the next 12 months, said Needham & Co. analyst, Charlie Wolf, this afternoon.

"We estimate that 20 million or more Windows users will join the iPod nation annually over the next few years and potentially fall under the sway of the iPod halo effect, which is great for Mac sales," he said.

What’s also behind the reduced impact of the current crop of music players is a change in the market dynamic, Wolf also observed, as reported by Distorted Loop: "…The importance of the iPod in Apple’s product portfolio has definitely taken a back seat to the iPhone, which is targeting a market that’s 20 times larger than the music player market," he said.

Wolf also explained that in his opinion the two "most important aspects of Apple’s “Let’s Rock” event in San Francisco were Steve Jobs’ health and a software update for the iPhone."

Wolf reckons that the market will take a little reassurance from Jobs’ dynamic on-stage energy yesterday, and also pointed out that the iPhone 2.1 software update that’s set to ship later this week is an extremely important move, designed to eradicate criticism of the product for, "dropped calls, poor battery life and crashes…it was crucial that Apple address these problems."

Wolf, who maintains a strong buy rating and a $240 target price on AAPL stock, added, "The iPod continues to gain share in markets abroad, most notably in Europe, where iPod sales dramatically lagged those in the US, and in China and other countries in the Asia Pacific region."

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