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The Classic doesn't run iOS and sells in significantly smaller numbers than the Touch. It's an inordinate amount of work for what's effectively an legacy product.

The shuffle and nano don't run iOS and there's no need for it on the classic. You don't need a fancy operating system to play music and video.
 
Eventually it will become commercially viable to put 120GB in the touch, which will kill the classic. Flash RAM, like everything else in tech, becomes cheaper by volume every year. Look at how the capacity in the iPhone and iPod Touch doubles most years (2010 was an exception, I admit)

Yes I agree.... And i did say that one day it probably will happen as the tech gets cheaper. Everything seems to be moving to flash.....
 
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