Currently, the iPod touch is treated by Apple's marketing department as Apple's gaming platform, while the iPhone 3G is touted more as the savior of all humanity, the amazing device that can do anything. In truth, the two devices are extremely similar with the only real difference being that the iPhone is a phone capable of placing phone calls over AT&T's network, has a built-in microphone, and has always on 3G connectivity via AT&T's network whenever it's not near regular Wi-Fi connectivity or a Wi-Fi hotspot.

This always-on connectivity is both the iPhone's strength and its greatest weakness, as one does not purchase the device without filling out a contract with and having to pay a monthly subscription fee to AT&T. Given this is the case, the iPhone is not purely Apple's device. It's controlled by both Apple and AT&T. Apple would do well to take a close look at two other devices, Amazon's Kindle 2 and the Peek, as an indicator of how they could make the iPod touch the more desired device, and a device that they control completely.

The Peek is a like a cellphone without the phone; it's a device that supports email and SMS messages only, and recently gained the added ability to post to Wordpress-powered blogs. The device normally costs about $80 and then one pays a monthly $20 fee with no contract to keep unlimited SMS and email every month. Also, a few times now, Peek has offered special $300 pricing on the device for a lifetime connectivity option so that one doesn't have to pay the monthly fee. The iPod touch could very easily be the amazing gaming device that it currently is and also adopt a Peek-like model, where it has a built-in 3G connectivity like the iPhone, but with no phone capabilities and thereby supported email, SMS, and full web-browsing. Apple could do this similarly to their current deal with AT&T and the iPhone, so that the connectivity was optional and a monthly charge via AT&T, but without contract; however, the better option would be to price the device higher and offer it with lifetime connectivity. Why would Apple do this? Because the iPod touch (and the iPhone for that matter) are not just devices manufactured by Apple. They are both, thanks to the portable Apple Store and the App Store programs running on both of them, money making markets for Apple.

There's another device out there that is having a lot of success, that Apple should really examine, and which is starting to get some buzz for being the "iPod of ebooks": Amazon's Kindle and Kindle 2. Both the original Kindle and the new Kindle 2 have featured a contract-less, always available wireless internet connection via an Amazon partnership with Sprint, known as WhisperNet. Amazon charges a larger fee for the Kindle and Kindle 2 than it probably actually costs to produce in order to subsidize this connectivity because they know that the Kindle is a money-making platform through all the content that is purchasable wirelessly for the device from anywhere.

Apple could learn a lesson from the business models of both the Peek and Amazon's Kindle. Tomorrow, Apple will be holding an iPhone 3.0 event focusing on all the new features of the next generation of the software running the iPhone. However, in all truth, that software is virtually identical to the software running the iPod touch. Apple would do well to establish some sort of always-on connectivity for the iPod touch separate from a contract-based deal between their customers and AT&T like the always available connectivity of the Peek and the Kindle. The already existent Wi-Fi capabilities of the device and the battery drain that always being connected to a 3G connection will entail would keep the connectivity fees down, and with the proper positioning and marketing of the device, Apple could stand to sell a lot more iPod touches separate from AT&T's ownership of the iPhone and build an even larger marketplace for their various virtual stores. They could even possibly begin to eat into both the Kindle and the Peek's market share and make the iPod touch one of the most ubiquitous pieces of tech out there.