New features emerging in Apple's (Nasdaq: APPL) next generation portable media player could enhance connectivity and convenience. However some changes may cause current Apple partners grief.

In a note delivered to clients on Monday, research analyst Jesse Tortora said that Apple's next generation video-iPod may include significant changes, adding a larger screen and potentially, internet capabilities.

The next gen video ipod[s] are expected to include a wider touch screen, wi-fi and GPS, he said.

The addition of GPS functionality should position the iPod as the central hub for all digital content (music, movies, GPS) in automobiles, the researcher explained.

Apple may also shift away from hard-drive technology in its next generation video player one analyst contends, causing a potential shakeup in the disk storage market.

Apple's widely successful portable media player, the video-iPod currently uses a hard-disk drive to store music and media - similar to those used in personal computers, but in a much smaller scale. The research analyst at Prudential Securities suggests that the Cupertino Calif.-based firm may switch to another type of storage technology as early as this year.

Our checks indicate that Apple may not proceed with its next generation hard disk drive (HDD) based video iPod design, transitioning instead to NAND flash as soon as late '07, Tortora told clients.

Flash memory is a non-volatile type of memory, where data is stored on a chip instead of a disk. The memory can retain its data even when the power is turned off.

Tortora estimates that video-iPods account for 50 percent of the total market for the small 1.8-inch hard drives currently in use, and about 4 percent of the overall hard drive industry. A switch to flash could result in excess HDD capacity, Totora contends. This may mean a slowdown for companies who supply the parts necessary for the old

Toshiba is the primary supplier of 1.8 inch drives for the Video iPod, the analyst believes, and Marvell (Nasdaq: MRVL) is a primary chip supplier for those drives, with revenue from iPod-related supplies of $40 million to $60 million a year.

On the other hand, it could boost flash demand by about 10 percent, increasing it share of the NAND flash segment to up to 25 percent of shipments, he says.

The economics of such a move by Apple closely resemble its '05 decision to move from the 1HDD based iPod Mini to the NAND flash based iPod Nano, when flash was 3-4x the cost of 1 drives, Tortora added.

The Cupertino Calif.-based electronics maker said that it sold 21.1 million units in its most recent quarter, however the firm does not break the sales down by model.

Shares of Apple fell 81 cents, or 0.96 percent, to close at $83.94 on the Nasdaq exchange.