First the facts: I have been an avid user of iPod touch and love the device. Though it is restricted in its use of wifi to connect to internet (data), I find it quite satisfactory as all places I frequent – home, office, hotels, most fast food restaurants (yes!) and school, have free wifi connection. The only time I am unable to check my emails is when I am commuting to and fro these places. I am completely fine with that as I do not need to do that anyways (and it may be dangerous). Most apps that work on the iPhone also work on the iPod touch. I have an RSS reader that helps me read various blogs and news sites I frequently visit. There are music applications, even an NPR application for radio. There are various applications for Facebook, Twitter, and other social networking sites. It also doubles as a mobile gaming platform. I don’t mind carrying a phone with me as my pants mostly have four pockets and there are enough slots in the dashboard and my bag to accommodate both these devices. What are absent is a phone and a GPS. The lack of GPS is compensated by an excellent maps application in iPod touch. I just download the directions one way and use that if necessary and voice direction is provided by my wife. Needless to say, a lot of innovation is still left in this product (adding a camera, GPS, office applications, etcetera) for a long time to come. Total cost of ownership for an iPod touch is $229, $299, or $399 depending on the memory one desires.

On the other side, iPhone has all of the above including what’s lacking in iPod touch. Will I prefer one over the other. If I have a choice, yes!!! I will go for an iPhone. But the cost of ownership of the device is prohibitive, for now. It comes to around $120 per month. I will go on to say that unless a corporate is sponsoring my data plan, I may never buy an iPhone and be happy and content with my iPod touch.

Coming back to the original argument – Broadly speaking, there are two categories of people – one who can afford and one who cannot afford an iPhone. In my opinion there are more in the latter than in the former. And I also believe that there are many more people in the latter category who haven’t yet switched to iPod touch from their current mp3 player. This is a huge market segment that will show itself in the years to come and buy the product. With Apple providing free iPod touch to Mac buyers as part of back to school program, this device will continue to have users and will get continuous traction among the 15 – 27 age group.

What can also point us in coming to the right conclusion are the sales figures of these devices. Per last announcement by Apple, sales of iPod touch doubled over the last year. Almost 3.21 million devices were sold last quarter, in line with 3.79 million iPhones. More here.

In the end, I would still place iPod touch in the growth stage. iPhone is going to be the choice of device for corporate users and those who can afford it.