The iPod touch: Still a category of one

Of all the short-form conclusions about the iPad, the one that seems to stand out from the crowd is, "iPod touch on steroids."

I'll buy that, since I also concluded much the same thing in a conversation with at least one reporter following the iPad's introduction. At first glance, it extends the same old iPhone-based operating system over a larger form factor that manages to both delight (still-unique industrial design and support for the largest online app inventory anywhere) and annoy (no memory card support, no USB, and supported by only one, less-than-beloved carrier) all at the same time.

On second glance, it makes me wonder why Applephiles and, more critically, consumers, continue to give the iPod touch short shrift.

The real star of the show

If anything, the so-called "iPhone without a phone" (and camera, and GPS, and so on) is the dark horse in Apple's mobile strategy, a carrier-free alternative for folks who either hate AT&T, really like their current carrier, or think the sun rises and sets over their existing mobile phone or smartphone. Whatever drives someone to choose a phoneless iPhone, the industry's failure to deliver anything to counter this class of device is little short of staggering. Apple would like to thank its competitors for giving it yet another free ride.

By the numbers, the touch is dwarfed by its iPhone big brother. Apple's shipped over 42 million iPhones compared to only 20 million iPod touch devices. Beyond the numbers, however, Apple has succeeded in reaching an audience that might otherwise not buy into its admittedly our-way-or-no-way smartphone mentality. For potential Apple fans who, for example, balk at the price of the company's laptops or simply want to see what all the fuss is about, a sub-$200 pocketable device gives them at least a taste of the cult-like experience without the sticker shock.

Apple's gateway drug

The connection between the touch and its MacBook and MacBook Pro laptop cousins isn't as ridiculous as it sounds at first blush. While a mobile device that can be bought almost on impulse obviously doesn't compete against a full-on laptop, the psychology of Apple's pricing structure makes it easier for budget-starved consumers to buy into the Apple universe. The iPod touch, then, is something of a gateway drug for the wannabe. This kind of thinking worked for Apple once before, when it introduced the iPod Shuffle as an entry-level alternative for folks who coveted the then-flagship hard drive-based iPod but didn't fancy its then-over-$400 price tag.

Of course, the world has moved on since the first Shuffle hit the market, and basic music players have morphed into full-featured devices. Yet over two years after the first-generation iPod touch hit retail shelves, it remains a category of one. Sure, Dell showed an Android-based slate-like device at CES that looks suspiciously like a phoneless touch clone. And a previously unheard of outfit called Giinii showed something called the Movit Mini at last year's CES before promptly disappearing back into the obscurity from which it came. But while competitors large and small continue to spin their wheels in bringing non-carrier offshoots of existing handsets to market, Apple cleans up with 20 million (and counting) sales to consumers who otherwise weren't looking for a phone.

History repeats itself

The iPad benefits from this two-stage strategy. Its 3G and Wi-Fi-only models repeat the iPhone/iPod touch product hierarchy, albeit without the messy split branding. Am I the only one shrugging my shoulders wondering why other platforms haven't gotten the message just yet? Even though touch sales numbers total less than half of the iPhone, a non-3G alternative grows the user base and increases growth potential for the combined application ecosystem.

Apple's App Store doesn't care if you've got an iPhone or an iPod touch. Developers, on the other hand, like the near-50% boost in audience size thanks to the presence of the Wi-Fi-only device in the lineup, an incentive that makes some of the other indignities -- like a sometimes-questionable app approval process, and a revenue split that trails competing platforms -- somewhat easier to swallow.

Pay once, reap twice

For its part, Apple's iPod touch customers represent a major return on its original investment in the platform. By extending what it spent on iPhone research and development to an ostensibly identical product, the company built a template for mobile handset development that should have become an industry standard. No one else got the message, though, because while Apple repeats the process with the iPad, Google remains stuck firmly in neutral in getting 3G-less Android out the door. Other mobile vendors may as well be in a different universe.

I realize I'm probably out of step focusing on the now-dowdy-looking touch when everyone else has eyes only for the iPad. Indeed, when Stephen Colbert substituted Apple's new big baby for the traditional envelope for his presentation stint on last night's Grammy Awards, he merely reinforced our willingness to have the pop culture agenda hijacked, repeatedly, by one company...along with our naivete in simply going along for the marketing-magic ride. It isn't about the best device for the job anymore. Instead, it's about the one that garners the most buzz. Right now.

Practically speaking, then, Mr. Colbert would have been far better off with a touch, because his efforts to get his daughter's approval as he waved the 10-inch device around the stage only underscored why these things aren't the answer for everybody. Of course, that wouldn't have been anywhere near as headline-worthy. Because the iPad costs a lot more than a touch. And when you're looking for new-to-the-fold customers with a bit of extra cash in their wallets, a $200 price of entry remains a far more compelling driver of long-term subscriber growth than a device that starts at $499.

Sometimes, though, the solutions that make the most sense for most folks may not be the newer, sexier ones that garner higher transaction prices (and profits) for their makers. Which is why I'll be buying a touch real soon, before Apple figures it out and discontinues the line altogether in favor of the iPad.

Carmi Levy is a Canadian-based independent technology analyst and journalist still trying to live down his past life leading help desks and managing projects for large financial services organizations. He comments extensively in a wide range of media, and works closely with clients to help them leverage technology and social media tools and processes to drive their business.