I have noticed a trend in the market consisting of people telling me they are waiting for an Android-based iPod competitor which works with WiFi and has a microphone. While many contemplate the Google business model for their new Nexus One phone I can tell you that sales of this device without GSM connectivity are likely to be strong.
The obvious question I have asked people looking for such a device is - well, why not buy an iPod. In some cases the lack of multitasking is the issue. In others it's the lack of microphone or the dislike of a closed app store which is controlled by Apple.
To me this shows that the iPod Touch will likely have to have a camera and microphone going forward or Cupertino risks losing marketshare. And perhaps the company will even begin to allow multitasking if we continue to ask politely. :)
Ironically these same people don't seem to want an Android-powered laptop - preferring a Microsoft OS.
Google does not need help taking over the world but if they are smart, they will consider getting an iPod competitor on the market and do so quickly. Apple for its part is no slouch and they realize the challenge ahead.
Apple's superiority comes in part from their App Store which is powered by the largest mobile developer community in the world. Ironically, the company continues to really piss off these same developers who continue to complain to me about the arcane rules and regulations which keep programs from being approved.
The logical thing for Apple to do is to continue to loosen up App Store restrictions. I sense more and more people are seeing Google as a serious enough alternative to Apple's products for them to consider evolving.
One final note worth sharing is the PDA market was effectively slain by the smartphone. This is coming from the Chairman of a show called Planet PDA. Moreover the iPod Touch is the PDA of today and the Android-powered tablet effectively becomes the PDA of the new decade.
Palm execs once told me the PDA is not where the action is -- it is the smartphone market that they need to be in. Sortly thereafter they purchased Treo. It is so interesting to see that both markets seem to be doing very well but Palm is not a major player in either. While Palm was laser focused on competing with RIM, Apple introduced a pocket-sized media player which eventually allowed them to take away Palm's existing and future smartphone business.