Is the iPod Touch driving App Store sales, or is it the other way around?

Apple's consumer-oriented product line once again cleaned up over the holidays. Not only was there a spike in sales of the iPod Touch, but there was also a huge level of interest in programs to run on the devices.However, there is some uncertainty over what's causing the parallel surges.

MacRumors noted the sudden jump in iPod Touch sales, which corresponded with a rush of purchases from Apple's App Store, as the new iPod Touch owners headed to the store to stock up on apps. Wired also picked up on the holiday frenzy, noting that the application developers for Chopper reduced the price of their app to $1.00 and still managed to net $25,000 in sales on Christmas Day alone. And Amazon shows three iPod Touch models in the top five most wanted MP3 players. The company believes that the interest is even continuing past the traditional holiday shopping season.

Anecdotally, virtually every parent of a teen I spoke with in the past month indicated that the iPod Touch was high on wish lists. Several reported that teens ended up receiving iPod Touches, either from parents or other relatives.

It's obvious that new iPod Touch owners will be buying apps to use on their devices. But what was driving the initial interest? It's really a chicken-and-egg situation -- interest in the device may have been created by the App Store itself.

Apple's marketing for the device (see clip below) focused on the iPod Touch as more than just an MP3 player. In fact, the music function was the very last thing shown in the ads, which showed example after example of popular games available from the App Store. The tagline reinforced that idea as well, calling it "The funnest iPod ever":

One 15-year-old who listed the iPod Touch as his only must-have gift for Christmas described the device's allure for teens:

"The 'fun factor' is the biggest selling point. The games and apps that are available that [require you to move] the iPod Touch to control the play are some of my favorites, even though I don't have too many of them yet. The fact of having the Internet and YouTube at my fingers is really cool... The primary function is still as an MP3 player, but absolutely, it's just all of the little extras that made it that much more appealing."

For months, there has been talk about Sony's PSP and the Nintendo DS losing market share to the iPod. Sales figures haven't been made public by Apple or the two gaming giants, but comments like these illustrate how consumers are beginning to embrace the iPod Touch as a gaming platform in addition to an mp3 player.