Steve Jobs called it the iPhone without the phone. And it seems to be giving the iPhone a run for its money.

On the scale of Apple device sales, the iPod touch is seeing its stock rise, with one estimate finding that the digital music player and portable gaming device makes up nearly 40 percent of units running Apple's mobile operating system.

More than 45 Million iPods

Based on Apple CEO Jobs' declaration on Sept. 1st at the unveiling of the new iPod line in San Francisco that 120 million iOS devices have been sold to date, market research firm Asymco estimated that there were 59.6 million iPhones sold through June, according to the company's filings with the Securities and Exchange Commission, and that about eight million iPhones and four million iPads were believed sold during August and July.

That indicates the likely total of iPod touches sold is 45.2 million, or 37.7 percent of total iOS units.

So, for all the hype about Apple's growing share of the smartphone market, it could soon be making more money from its products that don't make calls.

"The expansion of iPhone distribution plus the addition of iPad has reduced the platform footprint for the iPod, but it's still a sizable chunk," said the firm on its Web site. "More than one in three iOS units in use are non-cellular devices. As the iPad rolls that number could move toward 50 percent."

At last week's iPod event, Jobs announced that the latest touch unit, which he noted is also "the iPhone without a contract" is equipped for the first time with front and back cameras and the application FaceTime, which allows the unit to be used for video chat via Wi-Fi with other iPod users, iPhone users or anyone with a web cam, which could further increase its appeal. iOS4.0, available next week, will also include a feature called AirPlay that allows users to send media to other devices via Wi-Fi. Version 4.2 is due in November.

"We couldn't be happier about the progress of iOS," said Jobs last Wednesday. "There are 230,000 new activations per day."

He boasted that the iPod touch, beyond being an MP3 player, is a leading gaming console that he said "outsells the Nintendo and Sony portable game players combined." The eight-gigabyte version is $229, the 32-gigabyte is $299, and the 64-gigabyte is $399.

Paying More For No Phone

But with the iPhone selling for only $200 with a two-year AT&T contract, Apple fans may soon wonder why they should be paying more for a device that does less.

"The iPhone 4 is less expensive than even the entry-level iPod touch," notes mobile devices expert Avi Greengart of Current Analysis. "Yet, the iPod touch is incredibly popular. Why? It's simple, really. The iPod touch appeals to several groups of consumers."

Those include customers who don't want to be on AT&T, those who don't want a smartphone because it's too complicated or because they don't want a data plan and those who prefer a different smartphone, such as a BlackBerry, Greengart said.

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