The development work on the design of the Apple iPod nano began only nine months before its launch date. The nano uses flash memory, but with a miniaturised version of the display screen and "click wheel" found on the iPod classic. The screen of the nano also shares the same resolution as the classic. The battery and other internal parts are also in reduced size compared to the mini.
The nano works with iTunes on the Mac OS X or Microsoft Windows. It connects to the computer via the same proprietary dock connector as the third-generation iPod, the fourth-generation iPod, and the iPod mini, using USB 2.0 connectivity. The iPod nano comes with a stop watch and a multiple time zone clock function. There also exist combination lock features that make use of the click wheel to lock the iPod, and serves to secure the user's calendar and contact information. The Apple iPod nano uses general-purpose integrated circuits (IC) instead of smaller, low cost custom developed chips, in order to reduce time-to-market. This design helps in increasing the number of electronic components and increases the cost.

