Well, I load movies onto my iPod 5G (similar to iPod Classic), but I watch its movies on the TV using an AV cable. And the 3.5" iPod touch is fairly useful if you have good eyesight; it's better than the normal Youtube resolution, anyway.
I also don't see the benefit of buying songs just to play on a cell phone, or even worse paying $1 or more for the ring tone. But that's a booming market. There's no accounting for taste.
I wouldn't bother with an iPod docking boombox, but it does allow you to listen to the iPod without headphones. Tinny sound vs no sound, and it charges the iPod. In contrast, many of the cheaper levels of boom boxes don't have any plugs for the iPod, and Steve Jobs apparently doesn't believe in broadcast radio.
Also, making iPod dock boomboxes is a lot cheaper than designing and building USB boomboxes: iPod boomboxes are just electrical, but USB boomboxes would have to have processors and embedded operating systems, and probably also have Microsoft PlayForSure license (Apple doesn't license Fairplay) and several file codec licenses. At this point, at least a little flash memory for storing audio files would be a minimal cost. The other part of it is that Apple's UI is nice.
Back to the article, the tiny screen doesn't seem unreasonable if the broadcast is just news, which could be done adequately with no picture at all. The really nice thing about small devices like cell phones is that they're small devices that are with you at any time, including briefly boring times like the commute on public transit.
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