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August 4, 2008, 9:12 am

iPhone nano: A rumor before its time

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.]

An Iphone Nano would be nice, it would become the latest fashion statement at school when all the high schoolers can finally afford to own one.

http://www.tranharry.com

Posted By Harry Tran, Seattle, WA : August 15, 2008 7:48 pm

Joy of Tech did a brilliant comic about this yesterday:

Tom Joad iPhone nano

Posted By Robert, Vancouver, Wash : August 8, 2008 1:20 am

wow…i think making it a bit smaller and thinner is a fantastic idea, as long as it dosen,t take away from the functionality. i hope people don’t look at that pic of the iphone shuffle and think cool.

Posted By luis dangond,davie,florida : August 6, 2008 6:16 am

The only way a shuffle iPhone makes any sense is if it:

a) Synchronizes only names and phone numbers from an external source (Outlook or a custom-built app like the Palm desktop)
b) Recognizes voice commands (like LG’s ‘Call Someone’ or ‘Digit Dial’ spoken commands)
c) Is a phone roughly the size and form factor of a Bluetooth headset.

That way, you don’t need to have an interface for dialing and, since phone number and user data is very tiny, it wouldn’t require much memory to store thousands of phone numbers.

I think all of the manufacturers are missing out on this area. I don’t want my phone to be a camera, MP3 player, web browser, book reader, etc. I just want it to be a phone!

First manufacturer to do this wins my support!

Posted By Dave, Leesburg Virginia : August 4, 2008 3:01 pm

That’s what I want, a phone that dials numbers randomly, brilliant!

Hello? Who is this? You called me. I know, but I have the phone set on random, so I don’t know who I’m calling.

Posted By Nodack Phx AZ : August 4, 2008 1:38 pm

Hey,

I for one, wouldn’t mind a nanoPhone that perfectly syncs my Address Book, Calendar, iPhotos and iTunes.

I could care less about the wifi, GPS and Safari and the dopey camera.

Just add a phone to the iPod nano and I’ll be happy. (Oh yea,sell it to Verizon too!

Posted By Synthmeister, Huntsville, AL : August 4, 2008 1:06 pm

Asher’s “bunny” story was a superb analogy of the cell market.

Posted By Ken C, Gardiner, Maine : August 4, 2008 12:51 pm

There’s a python in the room but the bunnies keep munching their lettuce. The biggest and the fattest bunny says “I produce so many different products, the python will not eat me”. The Korean bunnies are oblivious because they think that they have lower costs and some other bunnies bury their head in the grass by saying that the python is good because it increases the “market”!

Already one of the oldest bunnies is sick, mumbling incessantly “Hello Moto”, sickness attributed to competition with other bunnies, but no bunny admits that it is the fear of the python that strangles the MotoBunny even before the python has coiled its rings around him.

But the python is dressed in a hide of a cool underdog, has religious-zeal support from “free-mason” style collaborators, excellent products with design that even the richest bunnies can’t seem to be able to imitate and can’t even seem to understand. Many employees of the “bunnies” are secret admirers of the python. Most of the consumers are willing to pay more for the python’s products and with the prices of hardware constantly falling, the old-school bunnies’ wishful-thinking advantage is slimmer that a leaf of their lettuce.

The bunnies think that the python will be kind and play by the rules of the market, but the python is predatory and loves to go for the throat, of even the biggest foes (a good example, the throat of a lazy fat old dragon called MS – in the classic “I’m a Mac/I’m a PC”).

The only bunny that does something, or at least seems to have its eyes and mind open is a business oriented, berry-munching bunny, this bunny understands what is going on, and even tries to emulate the python’s products.

Bottom (and depressing) line. Given the situation in the market of mobile phones, Apple has a good chance to come close to what it did in the MP3 players market. Of course, 60-70% market-share is on the long-end of the probability distribution (even if not impossible, given the docile competitor-bunnies), but 20% is a possibility in my opinion and 20% of the market is 100m mobile devices and countless revenue sharing deals and promotion of other Apple products, bringing Steven Jobs’ to world domination with market-cap surpassing that of Microsoft in 2009 to the delight of the new faithful (the old faithful would shudder at the thought that Apple is not an underdog). And I am what you fanboys (erroneously) would call “Apple hater”…

Posted By Asher Pat, London : August 4, 2008 11:05 am

My 20 yr old son went out and bought the iphone a few weeks back, he was so amazed by it hes now gone out and bought a macbook. Halo effect.

Posted By John, Cleveland : August 4, 2008 10:45 am

Right now it seems impossible to get a 32GB iPOD Touch (not PHONE) here in Switzerland. Can this be an alert for a new iPod touch ? Or simply is this country too small ?

Posted By Thierry Jeanneret, Terre de Haut, Les Saintes, Guadeloupe : August 4, 2008 10:43 am

Might need really thin fingers!

Posted By bill, st pete fl : August 4, 2008 10:41 am

Unlikely

Posted By Bob, athens, ga : August 4, 2008 10:40 am

If there is a new Itouch will it cost less than the current one. I noticed that Target gave you a $25 gift card if you bought a Itouch. I figured that this indicated that Apple was attempting to reduce Itouch inventory for a new one to be introduced

Posted By Tom Bates, Pittsburgh, PA : August 4, 2008 10:32 am

Who knows? Could be a play to double market share and ship another 10M nanos (cannibalizing 3M 3Gs?) this Xmas.

If not, what’s the next big play? New notebooks, mini, and AppleTV?

Posted By pk de cville, VA : August 4, 2008 10:31 am

I think the more likely announcement for Q4 is an iPod Touch Nano.

Posted By Hans, Parker, CO : August 4, 2008 10:11 am

A nice roundup of the speculation, but there’s a problem with all of it. Apple doesn’t drop their distinctive features in the newer smaller products, they drop the elements of generic products that people can live without: CD in MacBook Air, or provide he same experience with less capacity in a smaller package: iPod nano. An iPhone nano couldn’t be just smaller, they’d have to lose the screen which provides the Apple identity: real web view and the touch interface. The only way to make an iPhone nano both distinctive and usable would be to make one totally hands free that only does one thing well: make and receive calls and possibly messages. THis would require a huge breakthrough in voice recognition. Maybe they can do this but with driving laws requiring hands free this feature would need to be a software upgrade for all current iPhones as well. I’ll be happy if they do such a thing.

Posted By Ashley Grayson, Los Angeles, CA : August 4, 2008 10:04 am

is it April First today?

Posted By jmmx : August 4, 2008 9:54 am

Good! Rumors of new AAPL products just show how much interest people have in this wildly innovative company. Is it possible AAPL will sell 5 million iPhones this quarter? Man, that seems like a lot of product. Can only imagine how many computers go out the door with all those phones. I never really saw that many of the original iPhones out in the wild…but I see the new phone everywhere I go. It’s rather startling actually. On the plane the other day…and everyone in my row had an iPhone! Maybe not the dramatic, but i was flying Southwest, the discount carrier! Anyone that thinks the economy is so bad people aren’t buying new gadgets needs to get out more. These aren’t really luxury items, or even discretionary items…people are naturally moving to the next level of connectivity.

Posted By AAPLpie : August 4, 2008 9:43 am
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Philip Elmer-DeWittSilicon Valley veterans like to joke that Steve Jobs must be surrounded by a reality distortion field; if you get too close to him, you start to believe what he's saying. Thanks to the success of the iPod, the launch of the iPhone and the renewed interest in the Mac, Apple has made believers out of millions of customers - and made a lot of investors rich. But Philip Elmer-DeWitt believes that an ounce of skepticism never hurts when writing about the company. He should know. He's been covering Apple - and watching Steve Jobs operate - since 1982, first for Time Magazine, then for Business 2.0, and now for Fortune.
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