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An iPod Touch With Camera, Mic at Last?

Is Apple readying a significant upgrade to the iPod Touch?

Rumors to that have been circulating for months -- namely, that Apple (NASDAQ: AAPL) will release a new iPod Touch with a built-in camera and microphone, bringing more of the standard iPhone's features to the device.

The rumor mill picked up again this week following a brief report in Wired that cites an unnamed, "well-connected source" as saying Apple factories in China are already manufacturing iPod Touch models with integrated cameras and microphones.

An Apple spokesperson said the company doesn't comment on rumors or speculation.

As the iPod Touch already includes Wi-Fi connectivity, a microphone could give users the option of making VoIP calls where Wi-Fi is available.

Voice recognition and video capture would also be possible, again bringing the Touch closer to what the latest iPhone 3GS model offers, and expanding the number of applications it can run from the App Store.

"If they're going to do it this year, I would expect Apple to do a September release in time for the back-to-school season," Endpoint Technologies Associates analyst Roger Kay told InternetNews.com.

And while a souped-up iPod Touch might further overlap with the iPhone's feature set, Kay expects Apple to continue to distinguish the product lines. The Touch has its roots as a music player from the original iPod and has successfully transitioned to a gaming/entertainment platform.

"Apple is very disciplined about keeping its products positioned well and separately with the price and features clearly calibrated," Kay said. "They typically bundle features in a 'good, better, best' model or even just one or two, as when the iPhone first came out. They keep their lines pretty slim and clean compared to a lot of other companies."