Apple planning a mini-iPhone this summer?-- 14/02/2011

Apple has so far resisted the pressure to take the iPhone downmarket, despite repeated rumors of an 'iPhone Nano'. But as its traditional customer bases start to saturate, it is reported to be designing a smaller, lower cost version of its handset.

Any heavily branded device vendor faces a trade-off between the value attached to its products, if they retain an air of exclusivity, and the ability to increase volumes. Apple has clung to the value-over-volume course, and still achieved huge growth for its phone, but now it is under serious pressure from Android, which of course can reach all bases because of the wide variety of phones running it.
This could see a smaller iPhone appearing around midyear, according to Bloomberg sources, allowing Apple to target newer, but more cost sensitive, 3G markets like India. Bloomberg says the smaller iPhone is already in prototype and is about one-third smaller than the current iPhone 4. It would sell for about $200, unsubsidized, a huge drop from the $600-plus unsubsidized price tag of the current model.

This would allow Apple to go more effectively after the prepaid market, especially countries like India where subsidies and contracts scarcely exist. It would also give it the opportunity to forge an even more direct relationship with many users, bypassing the carrier, something it previously attempted with the idea of an iPhone with a remotely activated SIM, that was not tied to a specific cellco. The operators scuppered that plan, reportedly, by threatening to withdraw subsidies, but with an affordable iPhone they would have no such comeback.

According to the sources, the smaller version would have the same A8 processor, RetinaDisplay and other components that are in the iPhone 4, but not the new, upgraded components that will be seen in the next generation of the full smartphone.

Apple also is rumored to be working on a dual-mode iPhone that will work on both GSM and CDMA networks. A recent teardown of the new Verizon iPhone revealed that, although it is CDMA-only, it contains Qualcomm's GSM/CDMA modem.