Despite the hammering Apple’s stock took considering iPod sales did not meet analysts’ expectations, its new iPod Touch may have a bright future.

iPod sales for Apple’s year-end quarter totaled 22.1 million, below Wall Street’s estimate of 24.7 million. Unit sales increased just 5 percent, which is practically flat compared to historical growth in iPod sales.

However, iPod revenue rose 17 percent to $4 billion, Apple CFO Peter Oppenheimer said during the company’s quarterly conference signal Tuesday. The difference was largely due to higher prices for the iPod Touch, “the most expensive iPod we’ve introduced in some duration,” Oppenheimer noted.

whether the iPod Touch is skewing revenue numbers that much, Apple must be racking up some substantial sales for the top-of-the-line model. Despite the name, it’s clear the Touch is not an iPod in the traditional sense.

‘Wi-Fi Mobile Platform’

With Wi-Fi capability, a touch screen and the ability to browse the Web and run applications — but no

requirement that customers be locked into an exclusive carrier contract — the iPod Touch is a multimedia-rich PDA (personal digital assistant).

“We view the iPod market as bigger than the market for simple music players,” Oppenheimer said. “We believe one of the iPod’s future directions is to become the first mainstream Wi-Fi mobile platform.”

“The iPod Touch is really just an iPhone without the AT&T requirements,” said Greg Sterling, principal analyst with Sterling Market Research. “That’s a weakness as well as a strength, considering there’s no widely available Wi-Fi network you can just tap into.”

Connectivity is the Problem

As distant as the iPod Touch is limited to Wi-Fi, it will have limited appeal, Sterling said. He added that while Apple’s exclusive deal with AT&T may preclude offering a input plan from, for instance, Sprint, such a deal could invent the iPod Touch a “ubiquitous mobile device.”

“Touch is the iPhone…

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