And to prove my affirmations, let’s take into consideration the example of iPhone.  Nobody was expecting that in the end of last night’s conference that treated almost 90 percent of its time the subject of iPods, Steve Jobs would detonate the bomb.

Nonchalantly, the Apple CEO decided to cut 200$ from the iPhone’s price, like it had been a product launched two years ago and not two months ago.

With only two sentences Apple gave birth to a lot of questions. But before analyzing iPhone news, let’s stop a bit and turn our eyes on iPod Touch. Introduced last night by Steve Jobs, iPod Touch is an iPhone minus the camera and the ability to make or receive telephone calls.

The iPod Touch features the same multi-touch interface as iPhone and also includes Wi-Fi wireless networking and three amazing applications that use it – Safari, Apple’s YouTube application and the new iTunes Wi-Fi Music Store which lets users wirelessly browse, preview and buy songs and albums from the most popular online music store in the world.

“The iPod touch is a landmark iPod, ushering in a whole new generation of features based on its revolutionary multi-touch interface and built-in Wi-Fi wireless networking,” said Steve Jobs, Apple’s CEO. “People are going to be amazed at how thin it is and how much it does.”

Also similar to iPhone, iPod Touch has a built-in accelerometer that automatically senses when you rotate it into its landscape position. When you’re in music, it automatically switches to Cover Flow so you can browse your music collection by album cover artwork with just a flick of a finger. iPod Touch also has a built-in ambient light sensor that automatically adjusts the display’s brightness. iPod touch features up to 22 hours of audio playback and up to five hours of video playback.

Steve Jobs said during his speech that the new iPod Touch, which is scheduled to be available later this month, will come in two “flavours”: the 8GB model will be $299 while the 16GB model is $399.

Pay attention to this price tag because it’s identical to the one announced later on by Jobs for iPhone.

Despite all the bag and whistles regarding the iPhone, let’s not forget that still the real business for Apple, the product that generates the money and the so-well known halo effect is the iPod. Compared to iPod, the iPhone is just a daring gamble.

The iPhone is the effort made by Apple to extend its business in other areas, but it will pay off in the next year.

Obviously, while chasing a market share in the mobile phones market, Apple couldn’t risk leaving its millions of iPod fans without the interface and functions that iPhone revealed back in June. Since the very moment of its release, iPhone seemed to be the (even it not intended) the genuine iPod killer that every other Apple’s competitor tried to produce in the last few years, failing to get even close to it.

And since iPhone’s release, Apple fans have been confronted with one dilemma: what was even cooler, the iPod or the iPhone? The answer was obvious and the hundreds of thousands of iPhones sold are just a proof.

By not bringing to the iPod the same features as those that could be found on iPhone, Apple bore all the odds to cannibalize its iconic product, a device to which they owe so much and that became a token of the company just like The Statue of Liberty represents for New York.

But might this iPhone price cut hide Apple’s fear of not achieving its sales goal? Might this 200$ price reduction hide Apple’s inability to correctly assess the mobile phone market and to position itself in reference to the competition?

I think not. Apple declared that by the end of 2008 they expect to have already sold 10 million units. In September they will be celebrating the first million units sold, and the phone hasn’t been released in Europe and Asia yet.

Two days ago the research firm iSuppli said that in its first month of presence on the market, the iPhone accounted for 1.8 percent of all mobile handset sales in the U.S, meaning that more than 220,000 handsets have been bought during summer’s hottest month.

Also according to IDC's Worldwide Quarterly Mobile Phone Tracker the big story of the last quarter was none other than Apple’s iPhone. "Even though limited in the number of units shipped, the iPhone is likely to have a disproportionately large impact on the industry. For one, it has pushed the envelope on industrial design and user interfaces for all vendors.” said Shiv K. Bakhshi, Ph.D., director of worldwide mobile device research at IDC, at the time.

Also according to April Benchmark Survey unveiled by M:Metrics 56 percent of British and 64 percent of American mobile phone users were aware of the iPhone. In the U.S 14 percent of those who had heard about the iPhone reported they would be highly interested in buying one. As you can see, regardless the price, the iPhone could sell for another year. So, why take the risk of getting angry a lot of customers that paid $599 for a product that in only two months from its release reduced its price to $399?

Already the forums and the discussions groups are on fire over Apple’s announcement. Computer World is running a interesting story about how Apple had soured the love of some iPhone owners.

"Over time I have owned a 3G iPod, original shuffle, iBook G4, iMac, new shuffle, 4G iPod, video iPod, iPod mini and now the iPhone," Computer World is quoting a user.. "I can see updates to the product line being made over time but $200 in two months is a kick in the nads to EVERYONE who bought an iPhone”.

But in fact it’s all about choices. Apple now offers iPod Touch at the same price as the iPhone. Besides the telephony, the only distinction between the two is the storage capacity. Now you can decide what you want: do you need telephony or not?
If Apple had kept the iPod line unchanged, it would have faced all the odds that the iPhone cannibalize the iPod.

But isn’t the iPod going to cannibalize the iPhone now? That is very unlikely as in the end we are talking in fact about two different products. Steve Jobs proves his entrepreneurial genius once again by allowing the clients to decide what they want without forcing him to choose for something pre-defined.  But if his decision has been the right one in terms of money and market share , we shall see within a few months.