Taking Back the Market

The iPod touch Will Outsell the iPhone

Tim Nash - 2008.12.23

Analysts have moved from saying that iPods were going to suffer with the rest of retail electronics to saying that consumers recognize that iPods represent good value for the money.

Deutsche Bank analyst Chris Whitmore found stock outages at Amazon.com, Target, and Walmart after Cyber Monday. The iPod touch is selling well in a holiday season when retail sales are down and electronics are doing badly.

iPod touch
The iPod touch

At least part of what we saw was consumers buying iPods at special prices because Apple refuses to discount, except for quantity purchases. If you want an iPod and that's as good a price as you'll find, why not buy over the Black Friday weekend?

A Games Platform

Apple is busy talking up the iPod touch as a games platform, so competitors should be watching it and the iPhone.

It's platform sales that count. Sony's PlayStation Portable (PSP) is clearly vulnerable. The latest refresh looks like it won't attract masses of new users. Sales of the iPod touch and iPhone 3G are likely to reach 16 million over the previous quarter - the same as Sony is hoping for the PSP over the 12 months ending 31 March.

Nintendo is busy dominating the Japan sales charts with the new DSi, which it won't launch in the US until next quarter. According to Media Create figures quoted on kotaku.com, the DSi has sold over 660,000 in 6 weeks, heavily outselling the new PSP.

Fortunately, Nintendo doesn't have to fail for Apple to succeed. If the iPod touch/iPhone platform continues to attract major developers and games like Rolando, SimCity, and Metal Gear Solid sell well, it will become the clear number 2 handheld gaming platform. Just taking over from the PSP as the DS alternative could add 10 million sales per year.

A VoIP Phone

The differences between the iPod touch and the iPhone are blurring in a way that is very useful to Apple. Now that the first VoIP apps are available for the iPod touch, it could be as good as an iPhone for certain groups of users. (The iPod touch also requires a headset, as it has no built-in microphone.) If you spend most of your working time in a building or campus with WiFi everywhere and have a wireless network at home, it's much cheaper to use the iPod touch. You only need a cheap cellphone and a cheap minutes/txt package for times between WiFi networks.

Of the current VoIP options, Truphone is free and offers cheap connections to land lines and mobiles but not yet to other VoIP services. Basically it allows you to talk to other Truphone users. According to GigaOM, Fring is in trouble.

As soon as the iPod touch has the more widely used VoIP services like Skype, it will really start taking off as a WiFi phone.

A Camera-free Alternative to Smartphones

For organizations that don't allow cameras in the building for security reasons, the iPod touch becomes a better option than most smartphones, since built-in cameras are the norm. With a WiFi network and VoIP, anyone can be contacted in the building or campus at no extra cost, wherever they are.

Although the iPod touch lacks a camera, decent quality digital cameras are cheap and light enough to keep around. Since the differences in models from year to year are now much less significant, there is less and less need to upgrade before the electronics fail. For many, a point and shoot camera whose images could be sideloaded to an iPod touch for viewing and emailing would provide better quality in a more usable form than you get from a cellphone - due to a better lens, better image sensor, and better flash.

The Medical Market

Healthcare looks as if it will be a strong market. This is why Steve Jobs included a medical app when he launched the App Store. Bill Gates hoped Tablet PCs would take over, but this much more portable, easily readable device is far more likely to succeed. The iPod touch is also cheap enough for hospitals to buy it in bulk.

Despite all the noise about how Apple should enter the netbook market, it already has a cheap and much more portable alternative in the iPod touch, which you can use on the move. It is also much more profitable.

iPod touch + Mobile Phone Saves Money

In a recession, the package of cheap phone plus an iPod touch gives users more capabilities while cutting down costs and dependence on network operators. Students in the UK often carry two phones - one with a cheap texting package, the other with cheap minutes. People who don't want the iPhone but do want to access the App Store + iTunes Store can and are buying the iPod touch.

Steve Jobs has said that Apple will not leave an iPhone price umbrella. Apple is just removing that umbrella in a different way than analysts and competitors expected.

The iPod touch is also a guard against the greed or poor marketing of a monopoly iPhone network and will help drive the move towards buying bandwidth by the month.

What really matters is iTunes, the App Store, and the hardware these downloaded apps can be used on. LEM

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Tim Nash is a Director of WattWenn which has a new approach to scheduling the production of TV and movies to make the most of budgets. The views in this article are his own and are prejudiced from spending more years working for computer companies than he cares to remember.

Tim lives with his wife, her website on the area ariege.com, two daughters, a cat, and a dog in the French Pyrenees. He lapsed for a while after the Apple II, but became a Mac fan when his wife introduced him to the Macintosh IIsi. If you find his articles helpful, please consider making a donation to his tip jar.

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