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Rumor Mill: Apple Developing An "iPhone Nano"



Much like the iPod Nano, this version of the iPhone would be smaller, cheaper and appeal to a wider range of users:
Apple Inc. is working on new versions of the iPhone that are aimed at slowing the advance of competing handsets based on Google Inc.’s Android software, according to people who have been briefed on the plans.

One version would be cheaper and smaller than the most recent iPhone, said a person who has seen a prototype and asked not to be identified because the plans haven’t been made public. Apple also is developing technology that makes it easier to use the iPhone on multiple wireless networks, two people said.

Chief Executive Officer Steve Jobs, who remains involved in strategic decisions while on medical leave, would use lower prices to widen the iPhone’s appeal and keep it from losing further ground to Android devices. Less expensive iPhones may also ratchet up pressure on Nokia Oyj, whose handsets are especially popular in Europe and some developing markets.

“Instead of targeting 25 percent of the global mobile- phone market, Apple would be going after 100 percent,” said Charlie Wolf, an analyst at Needham & Co. in New York, who has a “buy” rating on Apple shares.

Google’s share of the global smartphone market more than tripled to 32.9 percent in the fourth quarter, eclipsing Apple’s 16 percent, according to Canalys. Apple will face another challenge as Nokia and Microsoft Corp. join forces in smartphone development, a partnership announced today.

[snip]

Apple has considered selling the new iPhone for about $200, without obligating users to sign a two-year service contract, said the person who has seen it. Android phones sell for a range of prices at AT&T Inc., Verizon Wireless and other carriers, and typically come with agreements that include a fee for broken contracts. The iPhone 4, sold in the U.S. by AT&T and Verizon Wireless, costs $200 to $300 when subsidized by a contract.
I still have another 11 months on my (crap) phone contract -- but when it's done I'm getting a smartphone. Android or iPhone, that is the question. Thoughts?

Image and head nod credit goes to CultOfMac.com.