The Good: Built-in Wi-Fi for music downloads and Web access, large screen, a wealth of applications
The Bad: Slightly underpowered external speakers
The Bottom Line: A poor man's iPhone, the Touch offers wireless music downloads, mobile Web access, and hundreds of applications while on the go
They say sequels often fail to live up to the original. That's not so with the second generation of Apple's (AAPL) iPod Touch. Apple has managed to make the Touch look better, work better, and deliver more features—all for a $229 starting price, significantly cheaper than the previous $299 entry-level version. The changes, while subtle, are so significant that I give the second-generation Touch a rare perfect score.
The Touch, while an iPod, is close to the iPhone in lineage. It has the same touchscreen, plays music and videos the same way, and includes a wireless Internet connection that lets you access the Web from your home network and wireless hotspots, such as those set up by AT&T (T) in Starbucks (SBUX).
Apple tweaked the look of the Touch, too. It's a lot thinner than the previous Touch, measuring 4.1 inches by 2.4 inches by 0.33 inches, and weighs a scant 4.05 ounces. The back sports a contoured stainless-steel casing, whereas the updated iPhone switches to glossy black or white plastic.
A year ago, when I reviewed (BusinessWeek.com, 10/19/07) the original Touch, many readers took me to task for complaining that there was no dedicated volume button for music and no built-in speaker for listening to music without headphones. In the new generation, Apple's engineers addressed both complaints by adding a rocker volume button on the left side and speakers on the bottom. They also added software to let you fetch e-mail and use other applications previously limited to the iPhone.
Perhaps the biggest shocker is Apple's decision to sell $29 headphones with a built-in microphone. The upshot? Users can download third-party applications from iTunes that will turn a Web-connected Touch into a Skype (EBAY) phone. In effect, the combination of features turns your Touch into a poor man's iPhone, letting you make cheap calls anywhere around the world without signing up for AT&T's expensive two-year service contract.
I've always felt the Touch ($229 to start) has stood in the shadow of the iPhone. But Apple's decision to let developers deliver software to both the Touch and the iPhone actually makes the Touch a more important product for Apple in my mind.
The devices' versatility is a key consideration. Not only is it a great high-end iPod but it's also fast becoming a neat handheld game machine for casual users. In the few weeks I've been using it, I've found myself launching a quick game of blackjack or slots while standing in a line or waiting in an airport.
And because of its great processing power, accelerometer, wireless access, and surprisingly decent battery life, the Touch is limited only by the imaginations of a growing stable of developers. One example: Wireless-music company Sonos in late October offered users a free application that turns the Touch into an additional wireless controller for accessing music from a PC, Mac, or online music-subscription service.
Another great new piece of software on the Touch is called Genius. With it, you select a song and press an icon that looks like an atom on the top of the screen. The software creates a playlist of tracks in your music library, based in part on Gracenote's digital music-database technology, that are similar.
The iPhone can do all this, too. Because the Touch does not include a 3G radio, though, the company likely gets slightly better margins with each Touch sold.
The Touch now sits in a class by itself. No longer simply a high-end iPod, it has become the foundation of what's sure to be an increasingly important handheld computing platform for Apple. Rivals should take note: This is one Apple product that could seriously take a bite out of the competition.
Edwards is a correspondent in BusinessWeek's Silicon Valley bureau.