Will the poor man's iPhone drive revenues for Apple?

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Apple will release its fiscal year third-quarter earnings tomorrow, and some analysts are predicting [2] that the poor man's iPhone--the iPod touch--will be an important piece of the results, thanks to its compatibility with the App Store.

According to AppleInsider, Caris & Company on Friday predicted that the iPod touch will grow toward 10 percent of Apple's revenues, but of course, iPhone and Mac sales will be the primary growth engines.

"No longer just a music/video player, iPod touch is increasingly a gaming device, etc., with video camera a likely addition in next (fall?) refresh," said the firm's report. "We believe iPod touch sales have been ramping all year, representing an estimated 18 percent of iPod units since September 2007 launch."

J.P. Morgan sees the iPod touch as a netbook of sorts. "We think the iPod touch provides the portability, Internet browsing, and email features that are the hallmark of the netbook PC experience," the report states. "With the iPod touch, the main limitation is the small screen size relative to netbooks. While we continue to believe that Apple will introduce its own netbook-like device, in the interim, the iPod touch should help the company benefit from the latest computing trend related to the netbook."

The iPod touch offers a pretty good alternative for those who don't want to be tied down to AT&T or add another wireless contract. I recently bought the iPod touch because I wanted an iPhone but couldn't justify adding another wireless plan on top of two contracts I already have with two different providers, one a broadband access plan and the other a family plan.

I'm considering buying Novatel Wireless' MiFi [3] device (I've been trialing one, and it works well) to give me the WiFi connectivity I need to access the Internet when I'm away from my home WiFi access point. Of course, it's not that elegant of a solution given the fact that I would be carrying around three devices--the MiFi (which is a little bit thicker than a credit card), the iPod touch and my BlackBerry, but I have a rather large purse anyway. Then again, I wonder if I really need to spend on the MiFi since the times I use my iPod touch are when I have idle time at places that actually have free WiFi, such as my kids' karate studio and Chic-fil-A. And I'm not going to give up my BlackBerry so I won't miss important email messages when I'm on the go.

My good friend, a self-proclaimed cheapskate, uses her iPod touch as a primary way to surf the Web and check email. She's too cheap to buy broadband service to her home, but "splurged" on an iPod touch off of Craigslist. Interestingly, she always wants to meet at Chic-fil-A and other places where there's free WiFi.

While the iPhone has more functionality, being able to avoid another two-year contract was attractive to me, and I don't miss out on downloading new and innovative apps. I suspect, based on what Apple is expected to announce tomorrow, that is the case for countless other cheapskates. --Lynnette [4]