All Hail the iPod touch

As the competition for smartphone domination starts to heat up, it is becoming increasingly clear that the iPod touch is Apple’s (s aapl) ace up its sleeve, and according to a report by Flurry, a San Francisco-based mobile analytics company, 24 million iPod touches represent about 40 percent of the total 58 million iPhone OS devices.

From the time I first laid my hands on the iPod touch, I have been a big fan of it — after all, it is just like an iPhone except that it has more storage, is skinnier, and has none of the hassles of dropped calls.

It is a handy little touch computer, that allows you to quickly check emails when sitting in a nice comfortable chair and reading a book. It allows me to play a game of MLB World Series, control my favorite music system — the Sonos — manage the Apple TV, and very soon, people will be able to use it to accept credit cards.

OK, so what if it doesn’t make phone calls or have 3G connectivity?  Those are problems you can fix by buying a MiFi and getting connected to Verizon’s (s vz) 3G network, and you can make Skype calls as well. Last January (wow, how time flies) I wrote about why Apple was going to rule the mobile web, thanks to the iPod touch. I wasn’t that off the mark.

AdMob, a mobile advertising company currently being acquired by Google, (s GOOG) in a recent report said that during the month of October (on a worldwide basis) the iPod touch accounted for 9.8 percent of all requests for applications and web sites that embed AdMob’s advertising script. In comparison, the iPhone has 22.4 percent of all requests. For the U.S. market, the iPod touch brought in 11.4 percent of total requests compared with 24 percent of requests emanating from the iPhone.

AdMob’s numbers mirror the data collected by Flurry, which tracks 3,000 applications, 45 million consumers and four platforms. In terms of the total number of user sessions per month, at present, iPod touch usage is much higher than the Android-based user sessions and is giving the iPhone a run for its money.

“It’s important to remember that the iPhone’s flank is protected by an often overlooked, powerful fighting brand: iPod touch,” Flurry notes in a report likely to be released Monday. “As all industry eyes look to the iPhone, the iPod touch is quietly building a loyal base among the next generation of iPhone users, positioning Apple to corner the smartphone market not only today, but also tomorrow.”

Agreed. In a post earlier this year I wrote how “the emergence of the iPod touch/iPhone is changing how we perceive and interact with computers. My friend Antonio Rodriguez, who founded and sold his startup Tabblo to Hewlett-Packard, thinks that a whole generation of kids is now growing up with keyboard-less computing as a default way to interact with machines.”

The iPod touch is much more than the iPhone’s little brother, as Jordan Golson recently pointed out:

Apple is perpetuating a “virtuous cycle,” as Gene Munster put it in a recent research note, to keep users on the iPod touch — an improved version of the lock-in provided by the old iTunes/iPod music ecosystem. Users buy the iPod touch; download apps; developers promote their apps (and the iPod touch platform), which leads to more consumers buying the iPod touch.

This virtuous cycle is more pronounced in the case of social networks and games. In its soon to be just released November Pulse report , Flurry notes:

Empirically, Flurry compared how iPod touch session usage has changed over the last six months across key application categories important to this demographic; namely, Social Networking and Games. While Social Networking’s viral nature is understood, iPhone Games have become increasingly social with the inclusion of features like friends lists, leader boards and remote multi-player modes. Together, Social Networking and Games category usage reflects the strength of the iPod touch Generation’s influence among its peers.

It is hardly a surprise. Apple changed its tune and started touting the iPod touch as a gaming device, which has started to have a negative impact on the earnings of specialist game device makers such as Nintendo.

It is starting to make its presence felt in the e-reader business. It is already a travel planner, thanks to apps like TripIt. So what’s next? (Related post: “The Past, Present & Future of Mobile Games.” On GigaOM Pro: “Is There Any Demand for a True Gaming Phone?” (subscription required)).09touch_3up.jpg

I think a digital camera would be a welcome addition, for that would allow the iPod touch to take on new roles: that of a camera. Secondly, it could become an easy-to-use and cheap bar code scanner. The latter would be the first of the many offerings for the iPod touch to disrupt a business described as enterprise mobility and dominated by Motorola’s (s mot) Symbol Technologies.

It is not as far-fetched an idea as you might think. Square is already building a card reader. Last week, when I went to Apple’s Palo Alto, Calif., store, I saw the salespeople using a new device instead of the typical handheld credit card terminals. They were a combination of an iPod touch/iPhone (I couldn’t tell) and a sheath that snugly wrapped around the device and plugged into its connector, making it a point-of-sale device. And that’s just the start.

Against such a backdrop, it isn’t wrong to say: All hail the iPod touch.