iPods in general are in decline. That includes the touches. In any case, his statement remains true.
So why should Apple enter the stupidphone market? Why? They specifically didn't, and that was for a reason.
Restating your position is not a rebuttal. You can say this about every market that Apple has ever entered:
So why should Apple enter the MP3 market? Why? They specifically didn't, and that was for a reason.
Except it doesn't. Using your same argument, because the Nokia Lumia only has moderate success Apple should not be in the smartphone market either.
It should not be a point of contention on an Apple fan site that Apple can execute better than Nokia can. If Nokia can manage moderate success it should not be a hard sell that Apple could do better.
And that same research shows iPhones being used in a smart way. Smart makes Apple (and third parties) more money.
Which doesn't disprove that a well designed feature phone could not be priced the same as a low end smartphone and still sell well. The fact that a feature phone costs a lot less to make means the margins on an iPhone Nano will not be anemic like low end smartphones.
This is the same model that Apple successfully used against netbooks. A high quality, far more focused product over a low quality more general product. On paper a netbook can do everything a laptop can. In practice the iPad is far better in the narrow feature set it addresses.
Likewise a very focused iPhone Nano feature phone could more efficiently and elegantly do the large majority of tasks done with a low end Android smartphone without requiring a data plan.
A PixoOS SDK exists. It is possible that Apple could allow general app development for a PixoOS based iPhone Nano. Or they might keep it limited to specific 3rd party developers.