iPod Touch numbers swell, cannibalize older iPod sales

The figures back up Apple's reasoning that the Touch is its 'netbook'

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Gottheil also noted that for the first time Apple acknowledged the iPod Touch has been eating into sales of the traditional MP3 player-style iPods. "I don't ever remember them using the word 'cannibalize'," said Gottheil.

That's exactly what Oppenheimer dropped into the Apple vocabulary. "We expect our traditional MP3 players to decline over time as we cannibalize ourselves with the iPod Touch and the iPhone," the executive admitted Tuesday.

"The iPod Touch adds another thing to Apple, it adds fuel to the App Store," said Gottheil. "It brings in more developers, with a broader range of applications than if it [served] only the iPhone."

AdMob's estimates also highlighted the success of the iPod Touch in other markets. In Canada, for example, it pegged the Touch installed base at 1.36 million, compared to the 805,000 iPhones, while in the U.K. the iPod Touch user base of 1.55 million almost matched the 1.68 million iPhones.

"The great thing about the iPod Touch is that you can be interacting with friends on social networking sites, and you don't have to pay for a data plan," said Gottheil, adding that the Wi-Fi connectivity of the Touch is particularly handy for younger users in school, since "they're almost continually in a Wi-Fi environment."

Apple has pushed the iPod Touch this summer, as it did last year, as the free giveaway to students and parents of students who purchase a Mac as part of its annual back-to-school promotion.

Last October, CEO Steve Jobs dubbed the iPhone and iPod Touch as Apple's entries in the netbook market. Since then, Apple executives have repeatedly ridiculed netbooks as underpowered, cramped and out-of-date.

This week, for example, Apple's Cook continued that attack. "I think some of the netbooks that are being delivered or many of those are...very slow," he said. "They have software technology that is old. They don't have a robust computing experience. They lack horsepower. They have small displays and cramped keyboards. You know, I could go on and on, but I won't."

At the same time, rumors persist that Apple is planning to launch what Gottheil has called an "iPod touch on steroids," a tablet-like device sporting a 9.7-in. touch screen that would sell for $800 and debut in October.

AdMob's June report can be found on its Web site (download PDF).

Copyright © 2009 IDG Communications, Inc.

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