(Update at bottom)

I have a longer-term concern about Apple's ability to continue selling iPods. Steve Jobs has repeatedly stated that Apple is not interested in selling a PDA or a cell phone, because people want to listen to music on these devices and he feels that is where Apple can best contribute. In fact he quite clearly laid out in several interviews that Apple has no intention of ever creating a cell phone.

Here is my concern. PDAs and cell phones were on a crash course. PDAs lost. Their sales are in decline, while cell phones are integrating their functionality, adding QWERTY keyboards, and essentially absorbing all of the key functions that the PDAs used to do.

So now people are left with two devices. Their phone/PDA and their iPod.

This article here discusses Samsung's new 1-inch 1.5GB hard drive that will be going into their cell phones this year.

The iPod is really a hard drive with a click wheel and a firewire interface for rapid data transfer. The screen is not large and the click wheel is not all that large either. Why couldn't that go on the back of a phone? You still get the cute white headphones to say you're an iPod user.

I would love to see Apple approach every one of the main cell phone vendors and build an iPod into each and every one of their phones. They could make miniscule amounts of money on each one and make it up in volume.

I mean, they're already working with Motorola to bring iTunes syncing to Motorola's phones. And that's a good start. But they need to go further and move the iPod INTO the phone.

Otherwise, I think that all of the main manufacturers will simply adopt some sort of Windows-media link and allow users to download their music onto their phones and Apple will once again watch their market share slide from <50% to less than 2% as it is with the Mac.

Because the cell phone can absorb the iPod functionality. But the iPod can't absorb the phone and the PDA. And people will not want to carry two devices - they will want to carry one.

So, please Apple, remember it's the platform and the wide distribution that counts at the end of the day. Build an iPod into every phone out there and connect them to iTunes where you can make $0.60 per song by hosting millions of ring-tunes instead of selling music and losing a few pennies per song like you are currently doing.

UPDATE (October 17, 2004): Reuters has written an article about this very issue but Om Malik disagrees with their (and my) assertion that this is a risk.

I still think that as long as miniaturization continues at the current rate, that Apple could effectively embed a screen, a click-wheel, and a mini-Firewire/USB plug on the backside of any phone. Look at the front, see the phone, look at the back, see the iPod. Simple, elegant, and allows for massive global distribution of the iPod through the one device that will be universal - the phone.

("New - the 2006 Motorola super slim flip-phone with iPod (tm) built-in") Seems plausible to me.