Smaller, Cheaper, Lamer iPhone Coming?

Kevin Chang, an analyst at JPMorgan, has concluded that Apple plans to introduce another type of iPhone, designed along the lines of its iPod nano. Chang pointed to a patent filed by Apple at the U.S. Patent and Trademark Office that describes such a product.

This phone would have more limited functionality than the existing iPhone and retail around US$300, compared to $499 for the 4 GB model and $599 for the 8 GB. The so-called iPhone nano would look more like an iPod than the iPhone, Chang speculated in a client note. For instance, it would be controlled by a scroll wheel rather than the touch screen that made so many people lust after the new gadget.

Mixed Emotions

The Apple fan base has received the news that the company is planning to launch another iPhone with mixed emotions. Many of them shelled out $500 with the expectation that there would be no price reduction for the phone-Web browser-video player device in the foreseeable future.

"I know this is first-generation technology, but there are a lot of bugs that need to be worked out with the iPhone, especially considering what it costs," Dan Isaacson, a marketing account executive who received his iPhone for free, told MacNewsWorld.

His chief complaints are that the battery lasts only for 200 to 300 charges, and the only way to view videos on the device is buy them from iTunes. On the other hand, he doesn't believe the keyboard is too cumbersome to use -- as some people have said -- and he finds the Internet access speed acceptable.

That said, Isaacson's advice for anyone contemplating a purchase: "Wait for the next generation."

On the other side, there are such Mac enthusiasts as Jim Tausch, a senior copywriter at Dixon Schwabl, who said he would have bought the iPhone even if he had known an iPhone nano was coming.

"Nothing could have stopped me from waiting in line for the iPhone's initial launch on June 29th," he told MacNewsWorld. "In fact, I knew at the time that there would very shortly be a new and improved version of the phone -- there always is. But the nature of the interface, the sleek design, and the Apple 'user experience' -- they own you from the moment you take the lid off the box -- outweighs all reason."

Another reason Tausch bought the phone was to reward Apple for its innovation.

"I think this kind of innovation is what is lacking across nearly all industries today," he said. "One way I can 'vote' for out-of-the-box product innovation is by ponying up and doing what I can to make it a success. That's why I took a half day off work, and waited in line for four hours -- I was number three out of about 50 -- and I had it activated before I left the parking lot."

Seattle resident Laura Young is another self-described Apple fanatic who would not have waited to buy the iPhone even if she had known a smaller iPhone was coming. "I think given the price point of the iPhone, most people who purchased ... are people who enjoy top-of-the-line gadgets and don't mind spending the money on frivolous things like a phone/browser/iPod," she told MacNewsWorld.

"Yes, there will be iPhones in the future that have improvements and are cheaper, but that is the damning thing about technology -- a month after you buy something you already have the old model," Young said.

A Year in Tech Time

Not that anyone is going to spot an iPhone nano on store shelves any time soon. Development of the phone appears to be at least a year away -- and a year in tech time can be an eternity for a firm as competitors race to beat the latest development on the market.

"It is clear from this application that Apple has at least thought about an iPhone nano," Jay Sandvos, partner with Bromberg & Sunstein, told MacNewsWorld. "And the number of figures and the length of the description suggest some significant amount of actual internal development activity."

What is not clear is just how far such activity may have progressed. Sandvos is not entirely convinced an iPhone nano is part of Apple's grand plan.

There could be other possible reasons for such a patent filing. "It reserves for them the future possibility of such a product, or at least the dialing interface described," Sandvos pointed out. "Also, lots of competitors are emulating the nano-style click wheel -- no doubt much more and more closely than Apple wants. It makes sense to seek patent protection for every possible aspect of such a device whether or not Apple actually plans to use it, just to prevent competitors from doing something along these lines."

Then there is this to consider: The patent filing could just be a red herring to pull the chains of competitors, the media and other outsiders.

"Although it seems clear that Apple has at least attempted to develop such an iPhone Nano," Sandvos said, "it would not be at all surprising to never have such a product actually come out into the market. It may be too hard, too expensive, or not lucrative enough."

Another Front

A quick look at the economics in the mobile phone industry, though, suggest Apple may well be planning to open another front, Allan Keiter, president of MyRatePlan, told MacNewsWorld.

"The market reality in this country -- where so many are used to paying nothing or next to nothing for a phone -- is that it is going to be difficult to sell [millions of] units at such a high price," he told MacNewsWorld.

Another iconic release -- the original Moto Razr, retailed at $499 in the beginning. "Motorola addressed that fact by cutting the price of the Razr fairly quickly ... gaining share, but foregoing quite a bit of profitability in the process," Keiter said.

"Apple may be looking to approach this in more of a traditional consumer electronics marketing way, by offering multiple iPhone models, each with different feature sets, at different price points," he suggested.