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Apple to do slimmed down iPhone?
Steve Jobs already plotting a Nano-style mobile, says analyst...

By Reuters

Published: Tuesday 10 July 2007

Apple plans to launch a cheaper version of the iPhone in the fourth quarter that could be based on the ultra-slim iPod Nano music player, according to a JP Morgan report.

Kevin Chang, a JP Morgan analyst based in Taiwan, cited people in the supply channel he did not name and an application with the US Patent and Trademark office for his report dated 8 July.

Apple filed a patent application document dated 5 July that refers to a multifunctional handheld device with a circular touch-pad control, similar to the Nano's scroll wheel.

An Apple spokeswoman declined to comment.

Long lines of people turned out on 29 June when US sales began for the iPhone, a mobile phone with a music player and web browser. Analysts have estimated that sales in the first weekend were as high as 700,000 units.

Chang said a way to follow up the iPhone with a cheaper version would be to convert the Nano into a phone and price it at $300 or lower. The iPhone sells for $500 and $600, depending on storage space.

Noting that the new phone could have "rather limited functionality", Chang said: "We believe that iPod Nano will be converted into a phone because it's probably the only way for Apple to launch a lower-end phone without severely cannibalising the iPod Nano."

Another analyst, Gene Munster of Piper Jaffray, said he expects Apple to bring out iPods that resemble the iPhone, with features such as a touch-sensitive wide-screen, later this year. Such products would help stop the iPhone eating into iPod sales.

Munster said in a note to clients: "We believe the iPhone reveals much of what the iPod will soon be. iPods with some of the touchscreen features of the iPhone should lessen the impact of cannibalisation."

The Apple spokeswoman also declined to comment on Munster's note.

Because of the anticipated lower price for the Nano-based phone, 2008 sales of 30 million to 40 million units "is achievable", according to JP Morgan's Chang.

This would be a much larger volume than is expected of the first iPhone: Apple has targeted sales of 10 million units in 2008, which would give it a one per cent share of the global market.

Sales of the iPhone are expected to be limited to a small percentage of the market due to its high price tag, particularly in the US where 85 per cent of consumers tend to spend $100 or less on mobile phones.

But analysts forecast that a cheaper phone from Apple, which leads the digital music player market, could pose a much bigger threat to long-established phone makers such as Motorola and Nokia.