Apple's iPod Touch Could Be Made a Whole Lot Better

Apple's iPod has been in secular decline for quite some time, but that doesn't mean the company should totally give up on it.

Jun 29, 2014 at 5:00PM

While I have been negative about the long-term prospects of Apple's (NASDAQ:AAPL) iPod Touch (long term, it could very well vanish), the reality is that if Apple simply gave this product a bit more tender loving care, the sales -- for at least as long as this product category remains viable -- would probably improve.

Interestingly enough, the company did a couple of things to bolster its iPod Touch lineup the other day. In case you missed the news, here's what happened:

  • Apple introduced a 16 GB iPod Touch with both front and rear cameras. (The prior version had a front camera only.)
  • Apple cut prices of the 16 GB, 32 GB, and 64 GB models from $229, $299, and $399 to $199, $249, and $299, respectively.

With this latest move, Apple makes the current lineup much more palatable, although the value proposition still seems a bit weak for the hardware that the company offers. A Nexus 5 phone, for example, with high-end hardware costs just $349 off contract. The good news, though, is that with just a modest bump in hardware, the iPod Touch line at these new prices could be quite viable.

iOS is so good that it masks weak iPod hardware
The current-generation iPod Touch sports the following hardware specifications:

Component

iPod Touch 5th Generation

SoC

Apple A5 (2 x ARM Cortex A9 @ 1 GHz + PowerVR SGX543MP2

RAM

512 MB LPDDR2

Wi-Fi

802.11 a/b/g/n

Camera

5MP rear-facing, 1.2MP front -acing

Source: Wikipedia.

ARM Holdings' (NASDAQ:ARMH) Cortex A9 is a pretty old processor core, and at 1 GHz it's not exactly the fastest available implementation of that core. Frankly, the A5 chip is a bit long in the tooth.

If you use the latest iPod Touch, you'll probably notice that although it is surprisingly fast for such old hardware (iOS is incredibly efficient), it could really benefit from a faster processor and more RAM.

Upgrading this is easy
The bad news is that the current iPod Touch really needs a faster processor and more memory. The good news is that this is probably the easiest, most straightforward upgrade that Apple could do. Though it'd be amazing if Apple could bring in the A7, further speeding up adoption of 64-bit software across Apple's platforms, the A6 chip is still extremely formidable and would run iOS 8 without a hitch.

Will this solve the iPod's sales problems? Not entirely.
With all of that in mind, while faster internals would dramatically improve the value proposition of the iPod Touch, it wouldn't change the fundamental problem that iPhone adoption necessarily eats into the iPod Touch total addressable market.

However, for folks interested in buying what is essentially a mini-iPad Mini, such an upgrade would be perfect and would serve -- at the very least -- as a stepping stone to eventual iPhone purchases.

Foolish bottom line
It's not surprising that Apple has neglected the iPod Touch since the most recent update in September 2012 -- the iPod is a market in secular decline, and the iPod Touch is no exception. However, every little bit helps, and the more accessible Apple's ecosystem is, the more likely it is that customers starting out with an iPod Touch could eventually be iPhone, iPad, and Mac buyers.

Leaked: Apple's next smart device (warning -- it may shock you)
Apple recently recruited a secret-development "dream team" to guarantee that its newest smart device was kept hidden from the public for as long as possible. But the secret is out, and some early viewers are even claiming that its everyday impact could trump the iPod, iPhone, and the iPad. In fact, ABI Research predicts that 485 million of these devices will be sold per year. But one small company makes this gadget possible. And its stock price has nearly unlimited room to run for early in-the-know investors. To be one of them, and to see Apple's newest smart gizmo, just click here!

Ashraf Eassa owns shares of ARM Holdings. The Motley Fool recommends and owns shares of Apple. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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