segmentation: the iphone/ipod touch trap

As a product manager and a newly-converted Apple user, I'd like to complain about the shabby job Apple is doing segmenting their iPod product line at the high end - where the iPhone and iPod Touch overlap.

I Remember Way Back in June when Apple announced that the iPhone was the "best iPod ever". Hoo doggie, were they right. The iPhone towered over the then-current iPod line, which we could all agree was looking a wee bit long in the tooth.

Now zip merrily ahead to the early September launch of the latest iPod lineup and the following segmentation map:

• iPod Shuffle - makes sense for users who don't need/want any sort of visual UI and who don't need/want to carry around a large music library.
• iPod Nano - makes sense for users who need/want a visual UI and who don't need/want to carry around a large music library.
• iPod Classic - makes sense for users who need/want a visual UI and who need/want to carry around a large music library.

So far, so good. Note I've kept "want to watch videos" off the segmentation map so far. End the iPod line at this point and you're doing OK, even with the iPhone in the mix.

But here is where it starts to break down. If the high-end mix looked like the following, everything would be swell:

• iPod Touch - makes sense for users who need/want a visual UI and who need/want don't need/want to carry around a large music/video library.
• iPhone - makes sense for users who need/want a visual UI, who don't need/want to carry around a large music/video library and who need/want a phone.

Arranged like this the segmentation map would be OK.

But when you begin to mix and match any of the following to these devices:

1. Browser
2. YouTube
3. Calendar
4. Mail
5. Bluetooth
6. Wi-Fi
7. Remote access to iTunes Music Store
8. Clock
9. Calculator
10. Contacts

Everything starts to get messy, especially when you add the same feature to both devices at different (and hard to justify) levels of functionality (see below re: calendar).

In the end, you're faced with the following choices at the high-end:

• What makes the iPhone interesting is that it is a convergence device - but it only comes with AT&T service.
• What makes the iPod Touch interesting is that it is almost a convergence device - but it only comes with Wi-Fi, that all reasonable consumers realize could support a VOIP phone.

Both devices could reasonably be positioned as productivity devices. . . if both had equal support for Contacts, Calendar, Calculator, Clock, Mail and Browser.

But they don't have even support. You can't enter a new Calendar entry on the iPod Touch - even though you feel like you should. Over time other support differences will emerge.

By adding a few desirable features into iPod Touch, Apple is saying you need to choose between near identical devices - one which is a higher-priced device with a so-so phone plus productivity features and the other a lower-priced device with no phone and crippled productivity features.

Good segmentation would lead the buyer to a clear decision - a decision that Apple isn't helping them make. A muddy collection of features in near-identical devices makes for disgruntled consumers - especially when the feature set of the iPod Touch seems to be deteriorating day after day leading up to its availability.

In the end Apple is trapped - add too many features to the iPod Touch and it cuts into the iPhone. Leave some but not all features out of the iPod Touch and lose the buyer who has a phone but who wants an effective convergence device.

BTW - don't lecture me on market segmentation by crippling features - I know how that game works. Versioning is a decent thing, done correctly. My argument is that Apple hasn't versioned the iPod Touch and the iPhone correctly, and that's going to translate into unhappy customers.

Or worse, confused potential customers. Because confused potential consumers wait to purchase.