Currently the iPod touch is missing three features from a hardware standpoint that would allow it to dominate every mobile category. The first and most important is a 3G modem. The second is a GPS receiver, and the third is a camera that can take at least 3.2 megapixel pictures and record video.
The addition of these three new features would allow the iPod touch to dominate several different categories of mobile devices. As it stands, it is already great at its primary purpose of playing music and video (although the Zune is good, no other mp3 device can even compete). It is also great to use around the home to access the Internet or e-mail via WiFi. For 75% of my at-home computer use, the iPod touch is sufficient. The application library allows me to connect to social networks, to play simple games as a casual gamer, and quickly research items on the Internet through the Safari browser.
The missing component of the iPod touch is its mobility. This is what has made the iPhone such a huge success. By embedding a 3G chip into the iPod touch (with GPS), Apple would open a whole new market for itself. All of the apps that are GPS specific would work on the iPod touch. This single device could suddenly take the place of your point-and-shoot digital camera, your flip movie recorder, your personal navigation device, your satellite radio, your netbook, your portable gaming device, your mobile internet device, your eBook reader, and possibly even your cell phone. The reasons why are simple: The applications already exist!
I would contend that the number one reason that most people purchase a netbook is as a cheap and easy Internet device for the home. The iPod Touch and the iPhone, although small, accomplish this goal much better. Apple has made the web browsing experience natural through a touch interface. The first time the Safari browser is used on an iPod Touch or and iPhone, the natural reaction is that this is how web browsing should be done. The screen is clear, and navigating is simpler than on a PC or Mac.
However, it would be easy for Apple to move even further into dominating this field. The simple solution would be making multiple sizes of the iPod touch. Apple could release an upgraded iPod Touch (version 3?) with the additional features discussed above in the current form factor, and also introduce new versions at 5″, 7″ and 9″.
Although the touch screen technology can be cost prohibitive in the larger screen sizes, by incorporating 3G into the devices, the cellular networks could subsidize this product. Even if this were still an exclusive deal with AT&T, Apple would open up the benefits of the iPhone platform for people that are reluctant to leave their existing cellular providers. This is because you could keep your current voice device, and add an iPod Touch as a mobile data device. It would cost a little more than adding a data plan to your current phone, but people that are reliant on voice call quality, would not have to abandon their current provider.
My advice to Apple would be to release these products on both a subsidized and unsubsidized pricing platform. There are some people that would only use these devices at home, and the inclusion of the WiFi chip would be sufficient for these purposes, so they would not need a data plan. However, others would want to take advantage of the mobility features already enjoyed by iPhone users. This would allow the product to continue to be used for its original purpose, but also open a brand new market. Customers looking for an all-in-one device would have a new option that could potentially replace the personal navigation system, point-and-shoot digital cameras, portable video game systems, eBook readers, and also would provide them with an easy way to store video of unplanned events.
The beauty of this new device is that it would be something that individuals with iPhone envy would appreciate, but also could be something that someone that already has an iPhone would also consider purchasing. It would be a device that you would not mind having docked as a navigation system, or radio player, because you could still accept calls from your phone at any time. The new accessories planned for the iPhone 3.0 software upgrade are great, but what happens when you are using the TomTom GPS and a phone call comes in? Well if you have two devices, this no longer is a problem.
Please let me know your thoughts on whether you would consider buying such a device. I am not in the industry and I have no idea if Apple is considering such a device, but if they are not, they may be missing a significant opportunity to increase their market share. These additions to the iPod Touch would be a much greater threat to Microsoft than any vaporware OS that Google is proposing. It could also lead users to consider using more products from Apple in other ways.
