Chip vendor PortalPlayer has been dealt a severe blow by Apple, as the computer company has apparently decided not to use PortalPlayer's media processor in some next-generation iPod models. PortalPlayer has been working on a successor to its PP5021 chip, but the company says Apple will not be using it in new high-end and midrange flash models. However, PortalPlayer expects (or is that hopes?) that Apple will continue using the PP5021 in other models. There's no word yet on whose chips Apple will be using in the next iPods, though we expect rumors to start flying furiously very soon. Meanwhile, in an indication of the power of the iPod ecosystem, PortalPlayer's stock plummeted over 40% in about 10 minutes of trading today -- not a major surprise, perhaps, given that the iPod accounts for a whopping 90% of the company's revenues. But, hey it's not all bad news: PortalPlayer has plans to provide chips for auxiliary displays on Windows Vista-based computers. Which should provide some relief in about two or three years, once such computers actually start shipping.

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Apple snubbing PortalPlayer for next-gen iPods