Apple's margins on iPod minis are small, but a huge volume of sales – and canniness on the part of CEO Steve Jobs – will ensure healthy profits, key industry insiders believe.

A report says: "In the coming months, Apple will begin to unfurl its strategy of making a little less profit on the average iPod, but selling a lot more of them."

The report predicts that the advent of the HP-branded iPods will spell less profit for Apple as HP pockets profit from its branded version, as will rising part-prices for the iPod mini.

But Envisioneering Group director of research Richard Doherty says Apple CEO Steve Jobs will fight to keep costs down. "There's the laws of economics and there's the laws of Steve Jobs' negotiation. He has been known to get components at cost, or sometimes below cost.''