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People want to upgrade every year, so why should Apple build the iPod to last?
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People only want to upgrade because their subconscious is raped on a daily basis by advertising. An iPod from two years ago really isn't any better than the most recent model, it's just a fashion statement.
Nobody actually needs to be able to hold 5000+ songs in a two-inch piece of plastic, but they have to buy it because television, radio, the internet, billboards, and the sides of buses tell them they do. Even though playing and storing music is it's primary function, that's not why people keep buying them, otherwise they'd buy
one and be done with it.