What Apple could do to make a few more billion dollars

iPod sales fell another 21% this quarter; obviously, MP3 players are disintegrating faster than a presidential candidates reputation. However, I think Apple is really missing something here which could strengthen their sales of the iTouch and throw them into a market that Kodak is trying to enter with laughable results.

The first "Smart-Camera" - A camera with apps.

Hear me out on this one. Arguably, the iPhone 4S has a camera that is better than 90% of the current compact cameras on the market; it's also smaller, has a better screen for viewing. And, gasp! There's apps that are useful, not gimmicky (Camera+, Hipster, Hipstamatic, etc). Sure, some of those are more for hipsters but there's even Photoshop Express to allow you to edit right from the phone. Its video is as good as most commercial, cheap video cameras. iCloud backs up all of the photos to your computer automatically, solving the headache of transferring data, losing memory cards, and having the wrong cable with you.

Here is where I think Apple could really make some killer money: simply give the iTouch the iPhone 4S camera suite, and sell it as a camera / video recorder. The most common camera quest I'm asked is what is the best camera for $150-200. If they could bring the iTouch 8GB, with the better camera sensor, in for the same price as it is currently (which, considering their supply chain, I think is very doable), I'd recommend Apple without a doubt. I'm not even saying they rebrand it as iPhoto or anything; simply stick an iTouch in with the camera's at Best Buy and nobody will be the wiser. If they wanted to go all out and add a dedicated camera button I would like that but if Jobs-Logic holds sway that will never happen.

Is anybody else with me? I feel like Apple is taking crazy pills if they don't do this.