With photo and video, Apple iPod touch, nano reinforce new market segment

Rumors are flying about Apple's next-generation iPod touch, which hasn't seen much of an update in the last few months and remains ill-equipped to continue as the phone-free little brother to the iPhone 3G S.

Since big brother acquired a faster processor, better camera and video capabilities in its recent refresh, it's only natural that lil' bro would reap the benefits of a trickle-down feature list.

The implications of this refresh are tremendous: the iPod touch already leads the market in a segment it pretty much created (the "portable Internet device," not quite the MID, or mobile Internet device, as we know it, and not just an MP3 player, either). Add camera and a video -- particularly the high-quality video users have been enjoying with the iPhone 3G S -- and you've got a market-busting product on your hands.

Portable MP3 players have nearly given up. Small netbooks are scared. Feature phones are frustrated. E-readers are concerned. And now, compact digital cameras and mini digital camcorders (such as the Flip) are quakin' in their boots.

ZDNet editor-in-chief Larry Dignan calls the rumored device "very disruptive." I agree, with the footnote that this pushes the iPod touch further into unclaimed territory.

TechCrunch's Michael Arrington gushes over the possibilities:

The Flip will take marginally better video, but it doesn’t have on-device editing and uploading to YouTube. Nor does it support Internet browsing, email and the thousands of games and other apps available for the iPod Touch. And we haven’t even mentioned the iPod’s primary purpose - music. Guess which one wins?

Arrington's assessment isn't really fair, of course. The Flip -- which is a favorite among pro videographers needing quick-and-dirty video but don't have the space to drag a proper handheld camcorder or digital SLR camera with video capability -- has features the iPod touch doesn't, such as direct USB connection (no cord necessary), a hole for tripod use and a form factor that allows a user to stand it up by itself or hold it comfortably.

Ever tried to hold the glossy, apple-slice-thin iPod touch by its edges? It's not easy.

Nevertheless, the real news here is the possibility of such features on the iPod nano, which up until now served its lightweight purpose quite wonderfully. In terms of form factor, the nano is much more suited to play ball with the Flip -- it's almost as wide (but nowhere near as thick) and has a big 'ol button right in the center, just like a Flip.

(The iPod classic is rumored to also be the recipient of a camera, but there's a lot more room to wiggle in that product's frame than the nano).

I mentioned before that the iPod touch leads the market in a segment it arguably created. If the shoehorning of a camera and video capabilities into the rest of the iPod line (save the big-as-a-camera-lens shuffle) rumors have merit, it marks the welcoming of Apple's other iPods into this unchallenged market space.

The smartphone without a phone and contract, if you will.

Come to think of it, it's not unlike Apple's recent positioning of the iPod touch as a "fun" handheld gaming device, encroaching on the market inhabited by Sony's PSP and the Nintendo DS:

• Comparable portable MP3 players can't match "apps," Wi-Fi Internet and now digital imaging hardware.
• Small netbooks can't match portability, ease-of-use and price.
• Feature phones still one-up the touch on phone capability, but can't match any of the other features quite as well.
• E-readers have eye-friendly e-Ink, but they can't match the touch on price, ease-of-use and portability (imagine holding up a Kindle to take a picture).
• Compact digital cameras -- particularly the budget models -- suddenly become useless.
• Mini digital camcorders face stiff competition from a well-known brand as they barely enter consumers' consciousness.

Still surprisingly, no vendor to date has surfaced a device to take the iPod touch head-on in this segment. (Though I hear Microsoft's Zune HD intends to.) The movement of Apple's other iPods means the segment is gaining traction.

There are downsides to being a jack of all trades: being a master of none, as the saying goes. But for the mass consumer market -- rather than the videographer market, the business market for netbooks, and so forth -- this potential device represents the ability to gain all of these features, available across all these distinct devices, in one product for a single payment for $200, more or less, sans contract.

And best of all, being an Apple product, it's easy to use.

In this economy, that's quite a deal.