Here we go again -- another challenger to Apple's (NASDAQ:AAPL) seemingly impenetrable iPod franchise.

On Monday, SanDisk (NASDAQ:SNDK) unveiled a new eight-gigabyte music player for roughly $250, while lowering prices on other models. That's a potentially serious blow to Apple, whose iPod nano carries a maximum four gigabytes of storage and sells for $249.

Apple investors leaned on the sell button after reading the news, as the shares closed down roughly 2%. Perhaps these Chicken Little wannabes think that SanDisk has permanently altered the economics of the music-player business? Or that the upstart might prevent Apple from ever again attaining meaningful margins in its highest-growth business?

Well, they could be right. SanDisk is no chump. It's a world leader in NAND flash memory, the slim, sturdy storage inside devices like the iPod nano. Being a supplier, it can cut costs from the supply chain and pass savings to consumers. In addition, SanDisk's innovations in flash memory have produced meaningful cash flow from royalties, which should help fund any price war that ensues.

But "price war" is the operative phrase here. SanDisk's assault on the market has thus far earned it a 10% share of the music-player market, according to press reports. Cost advantages could increase its share, but I doubt many gains will come from Apple. SanDisk hasn't eliminated the iPod maker's core advantage: the seamless tie between the iPod and iTunes.

iTunes is, in fact, essential. Other devices can't access the store for downloading; its unique content provides a moat around the iPod, funded by Apple's blossoming free cash flow. Expect Apple's advantage to increase even further if the Mac maker finds a way to license movies for downloading, which I expect it will.

SanDisk's new player is undeniably cool, and it's doubtlessly going to win some converts. Music-store partners Yahoo! (NASDAQ:YHOO), Napster (NASDAQ:NAPS), and RealNetworks (NASDAQ:RNWK) are also likely to be thrilled to have another device for which to sell songs. But none of this means a new battle for the soul of the digital music business has begun. It hasn't and won't until old rival Microsoft (NASDAQ:MSFT) finally whistles a new tune. Wake me then.

Think I'm wrong about SanDisk's possible impact on Apple? So does Jack Uldrich. You can read his arguments in "SanDisk Eats Apple."

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Fool contributor Tim Beyers owns LEAP options in Apple and a new MacBook Pro, which he occasionally uses to run Windows. Get the skinny on all of the stocks in Tim's portfolio by checking his Fool profile . Yahoo! is a Motley Fool Stock Advisor pick. The Motley Fool's disclosure policy rocks.