What happens to the iPod touch in a post-iPad mini world?

When iMore first heard that Apple was going ahead with the 7-inch iPad this fall, and at a ~$200 price point, one of the first things we asked was -- what does that mean for the iPod touch?

The rise of the iPod touch

Apple launched the iPod touch in September of 2007, only a few short months after the original iPhone shipped. It was even more limited than the pre-App Store iPhone, and didn't even include basic internet apps like Mail, but it did provide a slightly lower-priced point of entry for iOS.

In January of 2008 Apple added those internet apps to the iPod touch -- for a price -- and in June of the same year, it got iPhone OS 2.0 and the App Store. The rest, as they say, is history.

Apple updated the iPod touch hardware in the fall of 2008, and again in the falls of 2009 and 2010. Year after year, the iPod touch hardware kept pace with the iPhone hardware, adding new chipsets, gyroscopes, FaceTime cameras, and Retina displays as the iPhone added them.

Then, in 2011, the iPod touch hardware was not updated. It got a new color -- a white option -- but that was it. No new chipset, no new optics.

The fall of the iPod market

Apple's iPod business had been shrinking for a while now. Apple sold 15.4 million iPods in Q1, 2012, down from 19 million in Q1, 2011. Apple maintains that the iPod touch accounts for roughly 50% of iPod sales, but 50% of 15.4 million is still less than 50% of 19 million.

The iPad, released in 2010, likely played some part in that. Though more expensive, it also offered a bigger screen and, for some things, a better experience. The $0 iPhone 3GS, released in 2011, may have also been a factor. Though it lacked a Retina display, the lower up-front cost might have convinced more people to more quickly make the leap from iPod to iPhone.

Yet, to this day, the iPod touch remains the cheapest overall way to access the App Store, and one of the most popular portable gaming platforms on the market. Starting at just $200, with no cellular contracts -- indeed, not even the option for cellular data -- its perfect for kids, for joggers, for developers, for those who want a phone other than the iPhone but still want access to iOS, and for those who simply want a tiny, app-centric tablet for home, travel, or work.

The iPod touch in an iPad mini world

With an iPad mini not only rumored to be coming, but rumored to be coming at the same $200 base price the iPod touch currently enjoys, where would that leave the iPod touch then in the lineup?

Apple has several options:

  • Cancel the iPod touch. This would replace the iPod touch with the iPad mini as the entry-level iOS device, and keep the product matrix cleaner and simpler.
  • Keep the 2010 iPod touch on the market. This makes it the pocketable alternative at the same price, or the budget, iPod shuffle option at an even lower price.
  • Introduce a new, 2012 iPod touch. This brings it back up to spec with the rumored 4-inch, 16:9 iPhone 5 and increases its value proposition at the same price.

Let's take them in order.

Canceling the iPod touch

As far as iMore has heard, Apple isn't canceling the iPod touch or replacing it with the iPad mini, at least not yet. Unless we heard wrong -- and it doesn't seem like it so far -- there will still be an iPod touch on the shelves when the iPad mini joins it.

Keeping the 2010 iPod touch on the market

If the iPad mini hits store shelves at $200 or $250, it makes it seem harder for Apple to sell a 2-year old iPod touch for $200. Even though miniaturization can be expensive, and ultra-portability can be a feature, for many customers smaller is synonymous with cheaper.

Apple could try to offset this with more cosmetic changes -- add "nanochromatic" color options like the iPod nano and iPod shuffle enjoy -- to increase the perceived value, but even that might leave the iPod touch as a tough sell compared to the bigger iPad mini.

Apple could drop the price to $150, perhaps less. But the current bill of goods for the lowest end iPod touch 4 is probably just under $150. If Apple can't reduced that to less than $100 or so, and you take into account manufacturing, transport, and other associated costs, they won't sell it for under $200. They're not Amazon or Google. They don't sell hardware at or below cost.

If Apple wants an even lower priced iOS device on the market, and they can get production costs down enough, this is an option. It just doesn't seem like a likely one at this point.

(Apple has announced that the current iPod touch will be iOS 6 compatible, like all current generation iOS devices they sell. Take that as you wish.)

Introducing a new iPod touch

There was no new iPod touch hardware in 2011, so Apple could certainly introduce an all-new, radically improved iPod touch in 2012. If it includes the new internals from the iPhone 5, and the rumored new 4-inch, 16:9 screen, then it will be seem as an even bigger hardware revision than it might have otherwise been.

The iPad mini will be perceived as all new hardware, and the best way to give the iPod touch a fighting chance at the same or similar price point, is to give it all new hardware as well.

If Apple wants to keep iOS as a premium brand, at least relative to the greater iPod line, then an all-new iPod touch 5 seems like the best option.

Conclusion

The iPod touch may get updated and stand its ground, dollar-for-dollar with the iPad mini, or it might stay around as a legacy device like the iPod classic, or it might stay get even cheaper and become the iPod shuffle of the iOS line. Potentially, Apple could even introduce a new iPod touch at the same price and keep the older one around at a cheaper price.

iMore hasn't heard what Apple plans to do with the iPod touch line yet, but we did hear a couple months ago that the iPod touch line wasn't going anywhere.

And that's certainly good news for kids, for joggers, for developers, for those who want a phone other than the iPhone but still want access to iOS, and for those who simply want a tiny, app-centric tablet for home, travel, or work.