iPhone Nano Rumors Return

The week brought speculation that the iPod Classic was either dead or due for a refresh. Now, Bloomberg dusts off another classic Apple rumor: The iPhone Nano is coming.

OK, Bloomberg doesn't actually call it the "iPhone Nano." But the reporters' unnamed sources, who were reportedly "briefed on the plans," say that Apple intends to release a smaller, cheaper iPhone in hopes of slowing Android's growth.

Wait a minute. Apple already sells a cheaper iPhone, the 8 GB iPhone 3GS. A few weeks ago, Apple permanently dropped the price to $49 making it the least expensive iPhone yet. But Bloomberg suggests that the mini-iPhone will be even cheaper, selling for $200 without a carrier contract.

Before we dig into that claim, here's a brief history of iPhone Nano rumors: Weeks after the original iPhone went on sale, JP Morgan analyst Kevin Chang said Apple would release an iPhone that resembled the iPod Nano, citing people in the supply channel. The Daily Mail followed up in August 2008, with a similar (read: silly) claim that the smaller iPhone would have a scroll wheel on the back. iDealsChina offered more scuttlebutt later that year, but without specifics. And in January 2009, Taiwan's Economic Daily News reported that a pair of electronics manufacturers were close to winning iPhone Nano chip contracts. Obviously, none of those reports resulted in an iPhone smaller than the one Apple releases every summer.

Anyway, the interesting thing about Bloomberg's report is not that Apple is reportedly considering a smaller iPhone, but that Apple could make an iPhone cheap enough to bypass the carrier subsidy business model that is pervasive in the United States.

I have my doubts; Apple makes big profits by selling phones for $600 and relying on carriers to foot most of the bill. Then again, Apple's Verizon iPhone 4 contains a new chip that can theoretically run on CDMA (Verizon, Sprint) and GSM (AT&T, T-Mobile) networks. Maybe Apple thinks it can sell a lot more phones by giving people the freedom to move between carriers.

It all seems a little lofty to me, but if the iPhone Nano happens as Bloomberg describes it, it'll be huge.

For comprehensive coverage of the Android ecosystem, visit Greenbot.com.

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