Image: Apple Inc.

In an early-morning teaser, Apple (AAPL) has chopped $20 to $120 off the prices of most of its iPod line.

The new prices were posted only hours before a special music event at which Apple is expected to replace most if not all of its existing iPods with new models loaded with more memory and added functions, such as a camera.

Among the cuts:

• 8 GB iPod touch reduced to $189 from $229 ($40 off)
• 32 GB iPod touch reduced to $279 from $399 ($120 off)
• 16 GB iPod nano reduced to $149 from $199 ($50 off)
• 120 GB iPod classic reduced to $229 from $249 ($20 off)

The new prices are posted, without comparisons to the old, on Apple's online store. Only the iPod shuffle appears to be unaffected. It still $79 for 4 GB.

Today's event is scheduled to start at 10 a.m. Pacific (1 p.m. Eastern) at San Francisco's Yerba Buena Center for the Arts.

UPDATE below with price changes announced at the event:

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Steve Jobs may be the master of event marketing, but lately he seems to have lost his touch.

Case in point: The "Let's Rock" special event Tuesday to which the press and analysts were invited with great fanfare – advised in at least one case by Apple PR that this was a big one, worth flying across the country to see.

There were, to be sure, a couple new products and some new price points – a redesigned iPod nano starting at $149, a slightly thinner iPod touch starting at $229 – and a some new features that drew admiring applause.

The biggest crowd pleaser seemed to be the iPod nano's "shake to shuffle" feature, by which listeners can switch to a randomly chosen tune just by jiggling their iPod in the air. Jobs also got a warm reception for the new Genius features on iTunes, which puts songs together that go together and creates digital mix-tapes with a click.

"These are revolutionary products and revolutionary features," says Jupitermedia's Michael Gartenburg. "I think Apple has positioned itself well for the fourth quarter and the holiday season."

But Wall Street wasn't so impressed. Apple (AAPL) shares fell more than 7.5 points (4.7%) during the course of the event, from $159.64 at 1:06 p.m. to $152.12 at 1:56 p.m. [UPDATE: The stock closed at 151.68, down nearly 4% for the day.]

Part of the problem was that Jobs had few surprises up his sleeve. Spy photos of the new iPod nano had been widely circulated before the event, and the iPod touch's price cut was long overdue. Even details of the Genius feature had leaked in advance. Only "shake to shuffle" seem to catch the crowd unawares.

The event was an "overall negative" for the stock because the Street was hoping for more new products, wrote Piper Jaffray's Gene Munster in a report to clients posted an hour after the event.

But it may also be that Apple has gone to this well too often. Other companies are content to introduce new products with a press release and an ad campaign. Apple seems to feel it has to throw a whiz bang media extravaganza.

That may work when what's being unveiled is an iPhone. For yet another iPod? Not so much.

For a blow-by-blow account of the event, see the live blog here from Fortune's Jon Fortt.

None of this is set in stone — especially as long as Steve Jobs retains the prerogative to change his mind at the last minute — but AppleInsider has posted the most definitive road map to date of Apple's (AAPL) fall product lineup.

Citing unnamed "people familiar with the situation," AppleInsider's Kasper Jade ticks off a schedule of release for a batch of new iPods, overhauled notebooks and refreshed iMacs, confirming several rumors that have been floating around for weeks and adding a few of his own.

Taken alone, none of these announcements sound quite big enough to account for the sharp drop in the company's gross margins — from 34.1% to 31.5% — CFO Peter Oppenheimer warned analysts to expect this quarter, citing a mysterious "future product transition." But together, they might do the trick.

Here they are, in the order Jade expects them to be released:

• New iPods in September. Digg founder Kevin Rose, an Apple watcher with a track record considerably more checkered than Jade's, predicted last Friday that Apple would soon revamp its entire iPod line, cutting prices sharply, making cosmetic changes to the iPod touch and introducing a significantly redesigned iPod nano with a long thin screen (link). Over the weekend Rose specified a date on which all this would occur: September 9 (link). Without endorsing that particular Tuesday as the date, Jade's sources confirm that Steve Jobs himself will headline a special event tentatively scheduled for the second week of September in which "cheaper and slightly modified iPod touches players and new iPod nanos and related service announcements are expected to take center stage." (link) One thing that will not be announced at that event, according to Jade's sources, is the long-rumored Newton-like handheld multi-touch device.
• New MacBooks and MacBook Pros in September or October. Jade's sources are cagey about the timing here, but they were explicit in saying that new versions of Apple's hot-selling notebook computers would not be available until some time after the new iPods are introduced. Whether that means they are announced at a separate event — perhaps in October — or whether they will be announced at the same event and shipped some weeks later is one of those mysteries that may not get cleared up until the event actually occurs. Among the changes expected: a MacBook clad in aluminum (like the Pro) rather than plastic; tapering around the edges (a la MacBook Air) to produce a slimming effect; a mysterious new chipset (but still with an Intel (INTC) CPU); and a newly designed battery cover and latch that offer easier access to the hard drive.
• Refreshed 20-inch and 24-inch iMacs in November. This is a brand new rumor, rather than a rumor confirming old rumors. According to Jade:
  • "People familiar with these plans have described the refresh to consist of 'speed bumps' rather than major internal or external changes. Based on the roadmap presented to AppleInsider, these systems would debut later this fall following the release of the new MacBooks, making their way to market with little fanfare."

Not expected before the end of the year are refreshes of the Mac Pro or the Mac mini, although Jade's sources report that the latter, once given up for dead, is getting a "major overhaul — the most significant in the mini's short history."

[Timeline and photos courtesy of AppleInsider.]

Japan has ordered an investigation of the first generation iPod nano for possible defects after one started emitting sparks while being charged. According to wire service reports, the problem surfaced in January in Kanagawa Prefecture southwest of Tokyo, and Apple (AAPL) reported it to the government in March.

An official at Japan's ministry of trade and economy said a defect is suspected in the lithium-ion battery in the iPod Nano, model number MA099J/A, according to the AP.

Battery fires are rare in iPods, but not unheard of. A search of Apple's discussion boards turned up a similar report filed on Feb. 20, 2008 by a user named Phil under the heading "My iPOD nano Exploded" (link). It reads in full:

Is there something wrong with the battery they put on the first gen ipod nano. mine just got blown to pieces. I was just charging it on my Laptop then it suddenly sparks and it caught fire. even the clicking wheel got melted. and the back of the ipod split open.

am i the first to experience this flaw! im so disappointed with that.

What should i do?

if you wanna see the pic go to – http://www.flickr.com/photos/23960698@N02/

The photographs show a badly charred black iPod nano, model No. A1137.

Lithium ion batteries have caught fire in Apple notebook computers, as well as laptops made by Sony (SNE), Dell (DELL), Lenovo and other manufacturers.

In the iPod line, only the nano seems to be having similar problems. In October an Atlanta airport worker claimed his iPod "nana" caught fire in his pocket, although TV reports of "chest-high flames" don't seem credible. (link) Last April, an Australian reported in an Engadget forum that his nano exploded with a force that sent it flying to the floor, where it sparked and smoked until he unplugged it. (link)

There are no reports of other iPod models catching fire in Apple's discussion boards.

Apple introduced the first generation iPod nano in Sept. 2005 and sold its first million in 17 days. It was discontinued in Sept. 2006.

It's not clear why the problems are surfacing now, or why Apple waited nearly two months to report the Japanese incident to the government, as required by law. Japan's ministry of trade and economy has "strongly warned" Apple and instructed it to investigate the cause.

With 2008 only a day away, most of the 2007 year's-best lists have come in, and Apple (AAPL) placed at or near the top of more than its share. Among the prizes its products took home this year:

• Amazon Most Loved Computer: Apple MacBookPro
• Amazon Most-Gifted Computer: Apple MacBook
• Amazon Most-Wished-For Electronics: Apple 4 GB iPod nano
• Amazon Most-Gifted Electronics: Apple 4 GB iPod nano
• Amazon Most-Loved Software: OS X 10.5 Leopard
• NY Times "Pogies": iPhone's visual voicemail (No. 1)
• PC World's Most Innovative: iPhone (No. 2 after Google Gears) and Time Machine (No. 4)
• Macworld Hardware "Eddys": AirPort Extreme, iPhone, iPod nano
• Macworld Software "Eddys": iWork '08, OS X 10.5 Leopard
• TIME Magazine's Invention of the Year: iPhone
• TIME Magazine's Top 10 Gadgets: iPhone (No. 1)

Apple has given free iPod nanos to at least 100 San Diego area high school students who lost their homes in the October wildfires, the San Diego Union-Tribune reports today.

According to the paper, the donation was made in response to an e-mail sent to Apple (AAPL) CEO Steve Jobs by Steve Boyack, a father of four and resident of Poway, Calif., one of the towns hardest hit by the fires. Boyack had been involved in relief efforts that included toy drives after wildfires swept the area four years earlier.

“It seemed like the high school kids were being left out,” Boyack told the Union-Tribune. “Having four boys, I thought what would be nice for the kids, and I thought iPods are an accessory most kids like and can't live without.”

Boyack didn't hear from Jobs, but he did hear from Michael Foulkes, Apple's senior manager for state and local government affairs. Foulkes, Boyack said, planned to take the program countywide but did not want any publicity and did not return the paper's calls.

Thanks to Gizmodo for the link.