Why iPod Touch Specs Will Never Compete With iPhone

We’re nearing the end of summer here, and that means two things without fail: back-to-school sales and the annual Apple iPod touch (s aapl) refresh. Although I switched to an Android (s goog) handset in January, I do miss my daily iPhone use. I’m getting my iOS fix through an iPad for now, but I keep thinking how great it would be if the next iPod Touch is every bit an iPhone minus the cellular voice support. That’s not going to happen this September or any September when Apple updates the iPod Touch; the iPhone will always have better specifications than the iPod Touch for one simple reason: money.

Many people will miss the point if they simply compare prices between an iPhone and an iPod touch. The most current iPod touch models cost $199, $299, or $399, depending on the storage capacity. Apple has a history of holding prices at the same levels with new or improved products, so I anticipate the next iPod touch line will follow suit. An iPhone 4 appears to be the same $199 or $299, again depending on capacity. Both the 32 GB unit iPhone and iPhone touch have a price point of $299, so I’ll use them for my explanation. That sounds reasonable, except there’s a problem: Apple earns about $600 for that iPhone 4, because the carrier subsidizes the difference, and there lies the crux of the parity problem between an iPhone and an iPod touch, which doesn’t enjoy any subsidy.

Why would Apple ever add all of the latest and greatest iPhone features to an iPod touch device that will only earn it half as much revenue? The simple answer is: it won’t because it doesn’t make financial sense. Does that mean the next-generation iPod touch won’t see a hardware bump? Nope. I fully expect new iPod Touches to gain at least one camera — possibly two for FaceTime support at some point — a GPS receiver, or some other current iPhone-only feature. Eventually, the iPod touch may get a high resolution Retina Display too. But the iPod touch won’t ever get all iPhone features all at once, because Apple can make the same device with support for voice calls and earn twice as much money.

The only exception to my prediction is when cellular voice networks are supplanted by data networks that truly support voice — perhaps then we’ll see an iPod touch with LTE support. Of course, such a beast will require a contract, at which point, the iPod touch and iPhone converge to one device anyway. And wouldn’t that defeat my whole strategy of having an iPod touch with the iPhone features but without the monthly service fees?

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