Marco.org

When analyzing the seemingly baffling decision to add a video camera to the Nano but not the Touch, Jobs’ brief interview provides a clear explanation that I think is credible and not an attempt to bullshit us: lowering the Touch’s cost is more important now than adding new hardware features.

But beefing up the Nano was more interesting to me. (Yes, all of my guesses were wrong. But that’s how the Apple prediction game goes.)

Apple’s focusing on improving the Nano for many reasons, but one that we’ve probably overlooked is to combat market saturation. Previously, there wasn’t much of a reason for iPhone owners to buy a separate iPod as well. There certainly isn’t much motivation for them to buy the Touch. But the Nano? If it can do things that the iPhone can’t, or it can serve in some roles better, Apple has expanded the market for people who buy and use multiple iPods.

The Shuffle had already accomplished this, to a degree. Lots of iPhone owners get Shuffles for exercising and other situations involving high risk of damage or theft. But the Shuffle sucks, and if more people buy Nanos instead, that’s a healthier bottom line and it keeps iPod revenue growth going.