They're diminishing rapidly because their market is disappearing. They're dead and just coasting on momentum currently. Again, all you did was say that they still sell. What you're missing is that they're having drops from quarter to quarter that are downright cataclysmic. Like, 50% area.
Previously the iPod Touch fit in that gap for people who didn't want to shell out for an iPhone but still wanted the apps. Now that data plans are pretty much standard and you can get an iPhone for dirt cheap on contract they're losing their market. Who is buying an iPod Touch now? You still haven't said what market there is?
I'm not falling for any fallacy. If anything, the sales figures are matching what I've been saying for a while now: the iPhone has left the iPT in a death spiral.
I could see them selling in markets where people don't have iPhones or data plans, but elsewhere? I'm not even kidding, why would anyone with a smartphone buy one? It makes no sense. It doesn't offer ANY advantages.