Following the introduction of the 1GB iPod nano, Merrill Lynch analyst Richard Farmer has slightly raised his iPod sales estimates. Lynch now believes that Apple will ship 10.1 million iPods this quarter, up from 9.8 million, and expects the company to ship 53.2 million of the devices in fiscal 2006.

“The new 1GB iPod nano makes Apple’s lower-end offerings more competitive with numerous Asian players,” the analyst said in a research note provided to iLounge. “Our retail channel checks during the holiday season suggested that non-Apple MP3 players in the sub $100 market did well.”