The iPod is growing up

news analysis If Apple really is putting a version of Mac OS X in a new iPod, presumably it has more in mind than showing high-quality reruns of The Hills.

Any talk these days of Apple and the future of mobile computing quickly turns to the iPhone. The company is on its way to selling a million iPhones in the first three months of what Apple says is a multiyear strategy to enter the mobile phone market.

But Apple makes another mobile device. It's called the iPod. And if the persistent rumors are fulfilled Wednesday during the latest episode of The Steve Jobs Show (a product presentation at San Francisco's Moscone Center), the iPod is about to get a whole lot more powerful.

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Apple announces a revised lineup of iPods, a new version of iTunes and a Wi-Fi Music Store.

A wide-screen iPod that looks an awful lot like an iPhone seems like the most likely bet for the sixth generation of Apple's ubiquitous music and video player line. It also seems very likely that those new iPods will run the same stripped-down version of Mac OS X found on the iPhone, something even Jobs himself hinted at during a meeting with Apple employees on the eve of the iPhone launch.

You don't need a sophisticated operating system to play songs and TV shows, so at that point, the iPod stops being just a gadget. So, then, what exactly is it? Like the iPhone, it becomes something in between a gadget and a PC, which has been treacherous ground for the PC industry.

The tech industry appears to be at another one of those pesky crossroads. The PC is, well, dated. We all need one, and we all use one, but we just don't get excited about buying a new one anymore.

As a result, the PC industry has been scrambling to find the next big thing. Tablet PCs? Nope. Home media centers? Maybe, but not yet. Digital televisions? Still the domain of the consumer electronics industry.

An iPod with a more powerful operating system and a touch screen could suddenly become an intriguing little device for those who like the iPhone, but don't want to spend 600 bucks or hook up with AT&T.

Apple found its next big thing six years ago when it released the iPod. It wasn't the first company to figure out that people wanted to carry all those Napsterized songs in their pocket, but it has certainly made the most of it. More than 70 percent of people in the U.S. who want a portable digital music player buy an iPod.

But the iPod really does just one thing. It does it well--and yes, you can also store contacts, appointments and play games that would have looked lame 10 years ago--but nobody buys an iPod to make sure they remember that doctor's appointment.

After Wednesday, that might be different. An iPod with a more powerful operating system and a touch screen could suddenly become an intriguing little device for those who like the iPhone, but don't want to spend 600 bucks or hook up with AT&T.

It wouldn't be hard to imagine some of those people put off by the iPhone's price and wireless carrier would shell out $349--the current price for the 80GB iPod--for an iPod that can do far more than just play videos or music.

That is, assuming Apple doesn't overlook what's really needed in a mobile computer. There's no point in putting a sophisticated operating system in an iPod if you wall that device off from the Internet. Apple has resisted adding Wi-Fi to the iPod thus far, but it broke that barrier with the iPhone and perhaps it has figured out a way to add Wi-Fi without killing battery life.

And it would really need to be a phone-less iPhone, with applications like Safari, YouTube and Google Maps. Ideally, it needs third-party applications, such as games or GPS navigation. But it might take Apple awhile to admit that, given that its approach to application development on the iPhone was to limit developers to Web-based applications.

The entire combination could make the $349 iPod more attractive. Apple's revenue growth from iPods has stalled, even though the unit growth is still above 20 percent year over year. That implies that iPod buyers are opting for the less expensive $199 4GB Nano or the $249 30GB iPod.

It would also finally give Apple the real wide-screen video player that iPod fans have been clamoring for since just before last year's "showtime" event. And, after all, that's still the iPod's sweet spot: mobile entertainment.

It's quite possible that Apple doesn't want to make that dramatic a leap just yet. Jobs prizes simplicity and aesthetics, and a large part of the iPod's appeal has been that it does one thing (or a couple), and does it (or them) well.

But a Mac OS X-based iPod could be a compelling device as the industry and its customers try to figure out how mobile computers should evolve. It would avoid the early mistakes of the UMPC, which runs a battery-sapping PC operating system, doesn't fit in a pocket, and at around $1,000, has been met with lukewarm--at best--interest from consumers.

There are other devices out there, like Sony's PSP and video players from Archos, that are trying to do the same thing. But with sales of more than 10 million iPods a quarter--and a whopping 21 million last holiday season--Apple has established the iPod as one of the most widely used handheld gadgets on the planet.

What if it were a computer, too?

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