Of the few places where Apple's (Nasdaq: AAPL) armor shows chinks, iPod sales may be the most glaring. The Mac maker's music players don't sell as well as they used to:


Last 12 Months

FY 2009

FY 2008

iPods sold




iPod revenue

$8,360 million

$8,091 million

$9,153 million

Source: Securities and Exchange Commission filings.

This week, Apple begins a program to reverse the trend. A refreshed line of iPods ships this week, CNET's News.com reports.

Apple is borrowing from the success of the iPhone 4 and iPad in remaking its music players. For example, the new version of the iPod touch includes the FaceTime video calling feature for when users are connected on a Wi-Fi network.

The Touch also gets the 4's Retina display, high-definition video recording, and what's called Game Center -- an app Apple says acts as a sort of social gaming network for those who own iOS devices. Call it Ping for iGamers.

Apple's iPod nano also gets multitouch features while the iPod shuffle now sells for $49. Add it all up, and it's clear that CEO Steve Jobs isn't content to cede market share to Microsoft's (Nasdaq: MSFT) Zune or any other player.

More importantly, Apple seems to be taking these steps to protect the iPod from other iProducts. Consider how it positions the Touch. Because it's a device targeted especially toward gamers, the Touch isn't easily replaced by other smartphones. Or so Apple wants you to believe.

Competitors would prefer you think differently. Every major smartphone now includes a music player. It's become a checklist item for Google's (Nasdaq: GOOG) Android operating system and Research In Motion (Nasdaq: RIMM) BlackBerry devices. Nokia (NYSE: NOK), meanwhile, has its own music store.

This week's iPod launch isn't likely to get a lot of press, but that might be a mistake. Apple is defying the industry by insisting the iPod remain a distinct product category -- separate from but in many ways equal to smartphones. Can the strategy succeed? I'm a skeptic, but as a shareholder, I'd also like to be wrong.

Now it's your turn to weigh in. Will this week's refresh help the iPod remain a distinct product category? Let the debate begin in the comments box below.

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Fool contributor Tim Beyers is a member of the Rule Breakers stock-picking team. He owned shares of IBM and Oracle at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. You can also get his insights delivered directly to your RSS reader. The Motley Fool owns shares of Google and Microsoft and is also on Twitter as @TheMotleyFool. The Fool's disclosure policy favors smooth jazz on rainy later summer days.