The Strategy Behind Why Apple Has Kept The iPod touch In Its Product Lineup

FEATURE: 06.24.19- Apple killed off all of its iPod models except for the iPod touch being the sole holdover and it finally was updated after four years late last month in May with a new seventh generation version but, with its popularity having since waned with the iPhone performing the same functions as the hybrid MP3 music player, why did the Cupertino, California-based tech giant decide to keep the device alive?

Earlier this month, just four days after the new iPod touch was announced by Apple, in a week in review email published every Saturday by the website TechCrunch (which this writer subscribes to), reporter Lucas Matney wrote his thoughts on the topic: “Apple ships a refresh for its worst device, but why?”

A game on Apple Arcade, the new video game subscription service coming this Fall, on the new iPod touch. (Photo: Courtesy of Apple)

According to Matiney, nobody was expecting an update for the iPod touch. He even feels that it’s a total anomaly and the dumbest device Apple sells. So, why throw it a new refresh? he asks.

“As with every perplexing move that Apple makes lately, it comes down to how the Cupertino giant is acquiring customers and making revenue in 2019,” writes Matiney.

“It doesn’t take much scouring through Apple’s marketing materials to understand who the new iPod touch is for, the answer hits you in the face, it’s for kids.”

It’s a low cost and entry level starter iPhone of sorts — an “iPhone lite” if you will — a characteristic of the iPod touch that some die hard fans of the original iPod feel doesn’t make the former device a true iPod since, in addition to being a music player, it allows one to browse the web, send and receive email and text messages, and install apps like video games (among other things). It truly is an iPhone without the phone features included but most important of all? It runs iOS.

It’s no secret that the cash cow, so to speak, for Apple since 2007 has been the iPhone — despite the fact that smartphone sales have declined in recent years — and subsequently, the company’s focus, above all else it would seem, has been on iOS, its mobile operating system.

Matiney posits that we will see how much Apple continues to build out features and products to get kids engaged with the company’s hardware and software earlier and earlier, namely iOS and the devices that it runs on. And according to him, likely with the goal of keeping kids away from the cheap stuff that Apple’s skyrocketing hardware prices might push them towards.

“The company needs to wrench more revenue from high-value users buying their most expensive devices, but that equation doesn’t bode well for the youngest Apple users getting their first device,” writes Matiney.

“It’s all just an interesting head-scratcher, but more fundamentally while Apple is trying to wrench more cash out of its hardware acolytes, it still can’t afford to shy away from low-cost devices that entice people into high-cost services. In this way its torn between two strategies, and left in this strange evolutionary stage where it has to ensure it doesn’t screw itself over down the road.”

Matiney cited a statistic from a study done in 2016 which declared 10.3 years old as the average age that kids got their first smartphone. With the lack of any serious studies since then, he suspects that the number has gone down to an even earlier age.

According to him, parents are likely already on the fence about taking the plunge on the device that comes even earlier than a smartphone and devices running Android are cheaper and more plentiful. Something like Apple Arcade could theoretically be a great sell for parents, games can be played offline and there are none of the pesky in-app purchases, but that only works when the parents aren’t buying a bargain Android tablet in the first place.

” While Apple has maintained the $329 entry price of the iPad, the iPad mini has jumped in price and the higher-end iPads are more expensive than ever,” writes Matiney.

Of note is that the TechCrunch reporter’s thoughts were written two days ahead of Apple’s annual worldwide developers conference (WWDC 2019), held the week of June 3, where the tech giant announced a new operating system for the iPad — the forthcoming iPadOS — which is an offshoot of iOS and will make the iPad from here on out, former iOS devices (provided it is compatible with the new software if an older iPad and of course any future releases of the Apple tablet).

” When the iPod touch was last refreshed in 2015, the iPhone 6S had just been announced and 2-year carrier contract deals meant you could get your hands on one for $199. That’s not the case anymore,” writes Matiney.

An entry level version of the new iPod touch with 32GB of storage only costs $199 making it light on parents’ checkbooks, credit cards, or wallets. For a hundred dollars more, they can upgrade to a version with 4x the capacity sporting 128GB of storage, well below the cost of the cheapest new iPHone currently being sold, the iPhone XR at $749 with only half the storage at 64GB (although at $299 for the 128GB seventh generation iPod touch, one is already running into tablet territory with the price range of the cheapest model available for the iPad being $329 as Matiney mentioned).

However, Matiney asks, at a certain point, will higher upfront costs for these entry level devices hamper iOS growth further down the road?

That’s certainly an aspect of the company’s strategy that Apple has to consider

The key point from Matiney throughout all of this?

“The crazy thing is that as Apple and Google’s cloud services are getting more sand-boxed, it’s becoming more and more likely that these first devices could determine what operating system a kid sticks with once they have more of a say in what smartphone they’re getting. Where are their photos stored? What can they play the games they’ve already bought?” writes Matiney.

Call the iPod touch a Trojan horse of sorts for Apple. How ingenious!

So, in essence, if you follow the TechCrunch reporter’s train of thought, Apple is hoping that a kid that gets an iPod touch today will be exposed to the world of iOS. Then further down the road, as they get older and have their own money to spend, since they are already in the ecosystem, they will become users of other Apple products like the iPhone (if they haven’t already gotten their parents to buy them one when they were younger) or especially, the Mac. It’s a totally devious plan that, hopefully, will make those kids future adults who will be Apple fans for life, resulting in the company raking in the big bucks for its products and services.

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