Apple UK's iPod advertising enters its second stage now, with posters and window displays appearing in London and Manchester in the calm before iPod mini is released here next month.

The UK accounted for one in six iPod sales over the Christmas period, making it one of the strongest markets for digital music worldwide. In the US Apple is witnessing very strong sales of its iPod mini, which ships in Europe in April 2004.

To maintain iPod sales here meanwhile, Apple UK's iPod advertising "adorns the windows of no fewer than 27 Apple resellers across the UK and Ireland". There are shop window displays at Virgin Megastore in Manchester and Peter Jones in Sloane Square.

Apple is also placing iPod ads at bus shelters, the London Underground and railway stations.

Apple is focusing its iPod advertising on the youth market and those ads have attracted positive comment from advertising industry insiders: AdAge executive producer Hoag Levins said: "The iPod has become such a wildly publicized cultural phenomenon because these ads have worked so well."

Speaking last week Media Week senior editor Mike Butcher told Macworld that the product's price indicates that Apple may be aiming at the wrong market segment: "Most people I see with iPods are in their 30s. By advertising specifically at the youth market Apple may be missing making more sales."

Apple's strategy seems to be working: US reports claim the new mini iPod is selling out across the country. Apple subtly warned of this when it revealed that it took 100,000 pre-orders for the product before it shipped.

Runaway success

The new product continues to gather critical acclaim. This morning's Washington Times calls the product a "sound success", stating: "For those wanting not only music and portability, but also style and panache, there is no equal to the iPod mini."

Merril Lynch analyst Steven Milunovich estimates that iPod will yield $1 billion this year.

Apple risks waking a giant, inflating demand far beyond its capacity to meet it. The company has admitted that it could have sold more iPods over Christmas, but couldn't "make them fast enough".

In a crisis of demand, Apple's retail employees in the US are reportedly operating a coloured ticket system for customers wanting to buy the new product.

Supply remains constrained. Macworld has learned that Apple's flagship New York store and other Apple retailers around the city ran out of all colours of the iPod mini within days its debut.

"The chap in the store said he had no idea when they would get any more; they ran out after just two days. He said it is the same across New York – even the resellers have no stock," a source explained.

Apple's success suggests that criticism of iPod mini's $249 price tag may not match market mood. Though Apple hasn't yet announced a final price for the UK market, it has indicated it hopes to charge £199 each (including VAT) for the product.

Apple has said this price is subject to change when the product ships in Europe.