But the fast rise of Apple’s iPhone 3GS, with its video recording capabilities, could cause ripples in that market. And recent reports of a move to include the same feature in the iPod Touch could set up a showdown between the maker of the Flip, San Francisco’s Pure Digital Technologies, which was recently acquired by networking giant Cisco Systems, and Apple in Cupertino.

Over the past two years, the low-end camcorder market has taken off, offering incredibly simple video recording devices that are very functional and sell for about $200 or less. The small single-purpose devices have encouraged a new wave of video recording and sharing, something observers believe the iPhone 3GS will capitalize on.

The blog TechCrunch reported that Apple was buying video camera components that appeared destined for the iPod Touch. Another site, MacRumors, backed up the report with images of future iPod covers that made room for a camera.

An iPod Touch with video would be more likely to cut into the Flip market because there’s no cell phone contract required and it is sold in the same retail outlets, said Ross Rubin, an analyst with the NPD Group.

An obvious fit

Aaron Vronko, CEO of Rapid Repair, which deconstructs and fixes gadgets, said the iPhone 3GS camera module would be an obvious fit for the iPod Touch. At about $9.50, the module might add a bit to the price of the iPod Touch but would be in line with Apple’s pricing, he said.

“It’s a really good feature match for the iPod Touch,” Vronko said, who agrees an iPod Touch with video could eat into sales of low-cost camcorders. “A lot of people are using it as an entertainment device and to access social media.”

Apple is not commenting on the rumors. But if it moves forward with an iPod Touch with a camera and video recording, it could boast a couple of advantages over other small camcorders.

As a Wi-Fi-enabled media player, it could upload video to YouTube directly, just as the iPhone 3GS does over Wi-Fi or the cellular network. It wouldn’t have cell phone service, but it could be used by anyone, not just AT&T subscribers.

YouTube said upload traffic was up 400 percent in the week after the iPhone 3GS was released.

An iPod Touch has a 3 1/2-inch screen and can also store up to 32 gigabytes, whereas the Flip line offers up to a 2-inch screen and maxes out at 8 GB of capacity. And if the iPod Touch includes the same editing feature for trimming clips as the iPhone 3GS, it could boast something no other low-cost camcorder has.

Even Simon Fleming-Wood, head of marketing for Flip, concedes that the iPhone 3GS offers the best video capture of any mobile phone he’s tried. And he believes it will be good for the entire camcorder market, bringing new attention to video capture.

But he said the 3GS or an iPod Touch with video recording is still at a disadvantage to the Flip. The Flip Mino HD and the Flip Ultra HD, which now account for 70 percent of Flip sales, offer high definition. The Ultra also offers stereo recording, which the iPhone 3GS doesn’t have.

Flip users can also easily share and edit clips using simple software that sends the video directly to a PC from the camera. Pure recently added the ability to share clips on dedicated online channels for friends and family.

“Together, it’s an experience that goes down the route of demonstrating why single-purpose devices exist,” Fleming-Wood said. “Apple’s iPhone can’t stand for video, it’s not its primary purpose.”

Flip cameras start at $150 for standard-definition camcorders and go up to $230 for the Flip Mino HD. The iPod Touch sells for $229, $299 and $399 for 8-GB, 16-GB and 32-GB models, respectively.

Dedicated devices

Ironically, Fleming-Wood said, the iPod proves his point that people still prefer dedicated devices. Even after cell phones added MP3 players, most people still preferred an iPod, he said.

If anything, he said, Apple will help people make the transition from big camcorders to light video-recording devices, just as they made the move from bulky cameras to point-and-shoot digital cameras.

“For Apple to join this market and help make video ubiquitous like still photography, it’ll be great for everybody,” he said.