Hey Bob, nice review. I think you're largely right in your replication of Apple's reasoning here... but I also think Apple is probably going to end up being wrong in their calculation that the Nano audience is going to be happy being told to "just go buy a Touch" if they miss certain features that the new Nano (aka 'Super Shuffle') lacks. Or if they just plain do not dig the very small screen size.
And I say this as someone who *likes* the new Nano/Super Shuffle... a lot. It's very good for its intended use. But not everyone wants a pure 'gym' shuffle, and all those who want something else don't automatically want a Touch, either. Those ppl are now pretty unhappy.
Worse, this move leaves a significant hole in Apple's line-up, which no doubt Microsoft, Sansa, and the rest will attempt to exploit. Again, some ppl *do* want a relatively full-featured player that's significantly smaller than a Touch, and which can pull double-duty as being both a gym-player and a cool 'media' player to have anywhere else as well.
Sure, one could easily argue that such a player is 'jack of all trades, master of none', and there's some truth to that... but that doesn't stop a significant segment of the market from still wanting one- especially if they've owned Nanos in the past. And those ppl will vote with their wallets.
Consider too that if you're one of the ppl who never watched video on their Nanos because you thought even the 5th gen screen was too small... how much more screen real estate could Apple have gained by keeping the overall size similar (maybe a bit wider and shorter), ditching the clickwheel, and making the entire front a touchscreen?
Say, a Nano that was very thin, and about the size of a credit card (i.e. wallet-storable), and nearly all screen?
Even if it couldn't be quite THAT awesome, realistically quite a LOT more screen could've been had, and I think that's what 5th gen Nano fans were hoping for/anticipating. Boy, were they surprised... hence some of the angry comments and reviews. =\
I myself am a hardcore *Apple* fan, not a hardcore *Nano* fan, but I can understand where the Nano fans are coming from.
The annoying thing is, we WILL probably see such a 'true' Nano touchscreen player before too long... from one of Apple's competitors. =[
Which highlights the real head-scratcher in all this for me- that this really didn't have to be an 'either/or' choice from Apple. They could've made Super Shuffles AND MultiTouch 'true' Nanos, and both would've sold very well... while leaving zero daylight for the competition.
Thus, the only rationale I can think of for diverting from such a strong strategy/iPod line-up and leaving such a hole is that Apple wanted to push (shove?) the Nano crowd towards the Touch, both for the higher ASP (average selling price) and perhaps more importantly because this makes more people into 'apps' buyers... which in turn attracts developers and helps push the entire iPhone/Touch platform.
This ends up being a 'snowball effect'... more apps buyers = more developers = more apps = more reason to buy an iPhone/iPod Touch = more iPhone/iTouch buyers = more apps buyers = more devs = more apps = more reason to buy an iPhone/iPod Touch..., etc. etc. It's a pretty awesome feedback loop of *cha-ching!* for Apple. But that's no comfort to former Nano fans, who loved the prior form factor and feature set.
Thus, I predict there's going to be quite a run on 5th gen Nanos. And after those are gone, the Nano crowd is likely up for grabs.
Apple will likely convert many into Touch users, but they may lose more than they banked on as well.