The iPod touch generation

Is Apple's iPhone-without-a-phone the McDonald's Happy Meal of mobile communications?

Click to enlarge. Source: Flurry Analytics

Peter Farago of the mobile analytics firm Flurry uses data from its November report to make the case that Apple (AAPL) is quietly — and successfully — using the iPod touch to lock in a loyal base of under-age users who will eventually become the next generation of iPhone buyers.

"While it is clear that the iPhone has significant short-term revenue value for Apple," he writes in a report issued Sunday, "Flurry believes that the iPod Touch holds more long-term strategic value for Steve Jobs and team."

"In terms of Life Stage Marketing," Farago writes, "the practice of appealing to different age-based segments, Apple is using the iPod Touch to build loyalty with pre-teens and teens, even before they have their own phones (think: McDonalds' Happy Meal marketing strategy). When today's young iPod Touch users age by five years, they will already have iTunes accounts, saved personal contacts to their iPod Touch devices, purchased hundreds of apps and songs, and mastered the iPhone OS user interface." (link)

The evidence that Apple's strategy is working, Farago says, can be seen in a graph of end-user sessions recorded over the past six months.

Flurry, according to Farago, tracks 15 million end-user sessions every day from its "analytics solution" code embedded in 3,000 applications on 4 platforms: Apple's iPhone OS ( both iPhone and iPod Touch), Research in Motion's (RIMM) Blackberry, JavaME and Google (GOOG) Android.

The graph above shows that the iPod touch's share of those user sessions has grown 4 points over the past six months — the same as Android despite starting from a much larger user base. While the iPhone continues to grow in user sessions, its share in Flurry's data has dropped from 57% to 50%.

Even more significant, according to Farago, is that kind of things the kids are doing with their iPod touches.

"Anecdotally," he writes, "we know the 'iPod Touch Generation' is made up of heavy MySpace, Facebook and SMS users, who voraciously share their lives with, and influence their ever-expanding social graph. Importantly, this also includes promoting products they like. 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."

Farago's empirical evidence is displayed in the two charts below, which show the iPod Touch growing faster than both the iPhone and the Android devices in Flurry's Social Networking and Games categories.

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