Apple 2.0

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iPhone nano: A rumor before its time

August 4, 2008: 9:12 AM ET

Is Steve Jobs preparing to launch a smaller, cheaper version of the iPhone in time for Christmas?

That's the rumor -- based on a brief item in London's Daily Mail -- that had Apple watchers buzzing over the weekend. "Report: iPhone nano to ring in the holidays" read the headline on Crave, CNet's gadget blog. "iPhone Nano Rumor Brings Hope Alive," wrote iPhone Savior. "Holy rumor, Batman," shouted Crunch Gear, "iPhone nano to be released by Christmas."

The idea that Apple (AAPL) might eventually introduce a family of iPhones of different sizes that sell at different prices is hardly new. A rumor that an iPhone nano would be launched before Christmas 2007 was making the rounds just over a year ago (see, for example, MacRumor here).

But the timing was wrong last summer and, according to Piper Jaffray's Gene Munster, this summer's rumor is also a bit off.

"Just as the company slowly diversified the iPod lineup and entered lower price points with every new version," wrote Piper Jaffray's Gene Munster in May, "we expect Apple to launch new models of the iPhone at lower price points in calendar year 2009."

Julian Ivan-Alexander, a London-based investor who moderates The Mac Observer's Apple Finance Board, expects Apple to eventually launch three or four variations on the iPhone. Writing under the byline Tommo_UK, he led a spirited discussion of the pros and cons of an iPhone nano on AFB last summer. Reaction there over the weekend to the new rumor was largely skeptical. Although an iPhone that retailed for say, $99, would break open the market to a huge block of new customers, Apple has no reason to sell one as long as people are still lining up to buy a $199 model that Apple can't turn out fast enough to meet demand.

"This rumour still doesn't make any sense to me for this year," wrote a British investor who calls himself sleepygeek. "Taking features out of the current iPhone loses $10 or more of revenue for every $1 saved in build costs. iPhone Nano would have to outsell iPhone by a large factor (5 -10 times the sales) to make sense." (link)

The Daily Mail item suggests that the new phone will be available in British shops by Christmas for 150 pounds (just under $300). It doesn't offer any supporting evidence beyond an unnamed "industry source" who is quoted saying that "a cut down version [of the original iPhone], with the candy bar shape of iPod nano music players, would be a huge hit as a Christmas gift." (link)

The London tabloid, which is better known for celebrity gossip than technology reporting, also cites an "expert" who suggests the nano phone would have a touch wheel on the back and a display on the front so that numbers would be dialed from behind. Apple filed a patent last year for a device that resembles this, but nothing came of it.

One wag on AFB suggests that Apple might also introduce a "shuffle" version of the iPhone. It would clip to your lapel and dial phone numbers randomly.

How would that work? See the (tongue in cheek) video below the fold.

[Image of imaginary iPhone nano and shuffle reposted courtesy of Information Architects.]

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About This Author
Philip Elmer-Dewitt
Philip Elmer-DeWitt
Editor, Apple 2.0, Fortune

Philip Elmer-DeWitt has been following Apple since 1982, first for Time Magazine, and now on the Web for Fortune.com.

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