Files with the extension .IPSW are 'Firmware Update' files utilised by the Apple iPod / iPhone.
Firmware is a computer program that is embedded within a hardware device, it acts like a software computer program i.e. being executed via a microprocessor, however it is specific to a particular piece of hardware, and is useless without it.
The .IPSW firmware file specific to the Apple iPhone / iPod is essentially a zipped archive file utiliising an Apple specific file extension.
.IPSW files can be updated to newer versions of the firmware, reasons for updating may include the addition of new features or bug fixes.
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