I think the Classic is a dying breed. I love the line but as was mentioned earlier, SSDs are not that far off from that storage capacity. It is probably going to be like the classic MacBook Pro, it supplements the newer models in the line up but is out of date by quite awhile.
Demand is going down, obviously, but I suppose it makes money for Apple, and there will be enough of a market for it for a very long time. It's not as if they have to invest anything. There is still someone out there making floppy disk drives and floppy disks, and they wouldn't do that if they didn't make money. Of course the production team has moved from a huge plant to a large plant to a small plant and will eventually end up in a small corner in the small plant
but as long as Apple makes money from it...
I could imagine that eventually someone will build an SSD that is 100% compatible with the drive in the Classic for a lower price, because there is very little call for these tiny hard drives, and then they'll switch to SSD.
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Or Apple may just decide that the stand alone music player market is now to small to be worth competing in.
Apple isn't just competing in that market. Check out Amazon. There is nobody but Apple selling any 64GB+ players.
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Agree that the discontinuation of the iPod Classic is inevitable; most likely as soon as SSD capacity can meet or exceed the capacity of the iPod Classic. However, from a cost perspective, I can have just about my entire music library in my car for $249. Compare that to a 'possible' $499 for a 128-GB iPod Touch and you realize what wonderful value the iPod Classic provides.
You can get that by buying a very cheap laptop
Or a portable DVD player that plays MP3 DVDs, you can fit about 90 CDs at 128 KBit on a single DVD. (Tried that once at home: Converted about 90 albums, burnt a DVD, put it into my DVD player and they actually appeared and played. Never actually used it after that, but it worked).