When you sell 304 million of them, sales will drop as demand drops...it's not as if the decline in demand for an Apple iPod is being filled by another MP3 player. More and more younger folks are getting iPhones, but the demand for the Touch will likely continue...although at a lower level...
Agreed. For what it is, the iPod is still best-in-class, mostly because all competitors have withered away over the years. It shows the iPod's strength as a media player, which is so well integrated into Apple's overall ecosystem. Of course, it helps a great deal to have iOS. Development continues.