Latest iPhone Nano Scuttlebutt: Cheaper? Yes. Smaller? No.

Who’s ready for some more iPhone rumors? Here’s what we have so far:

Bloomberg started things off with rumors of a smaller, cheaper iPhone and an iPhone that could work on any network in the world—it may be two different phones or the smaller phone may be the world phone.

The Wall Street Journal then chimed in and bolstered rumors of a smaller, cheaper iPhone but said it would be half the size of the iPhone 4, not two-thirds the size like Bloomberg said. Get it together, Bloomberg!

Then Cult of Mac jumped aboard the smaller, cheaper iPhone train and went as far as saying that this little phone might not even have any local storage—everything would be streamed from the cloud.

Several auxiliary rumors broke out, too; most concerning the iPhone 5, which is expected in June and is not to be confused with the smaller, cheaper iPhone meant to appeal to people looking for a more affordable phone. Both phones may very well be announced at the same time, though.

And now the New York Times weighs in, saying that the smaller, cheaper iPhone is real—according to anonymous sources, of course—but that it will only be cheaper, not smaller. As much as all these rumors drive me up the wall, this latest one actually makes the most sense.

Want to make a cheaper iPhone? Take an existing design and strip out some of the more expensive components. Apple could basically re-issue the iPhone 3G or 3GS and have carriers give it away for free with a two-year contract.

Hell, the iPhone 3GS is already only $50 on AT&T. Why go to the trouble of completely designing a new, smaller handset? It’s not like the iPhone—any model—is exactly cumbersome.

The Times reports that “a smaller device would not necessarily be much cheaper to manufacture,” and adds the following:

“Another senior Apple executive said during a private meeting recently that it did not make sense for the company to make multiple iPhone models, noting that Apple would stick with its practice of dropping the price of older models when it introduced a new one.”

So perhaps the mythical cheaper iPhone will simply come about naturally: the iPhone 5 gets announced in June, the iPhone 4 drops to $100 and then $50 a little after that and, if Apple keeps the 3GS around, it drops down to free. Maybe Apple stuffs a Verizon chipset into the 3GS for good measure, too.

More on TIME.com:

The Next iPhone: 4-inch Screen? Keyboard? Time Travel?

Apple Prepping Small, Cheap iPhone and Free Online Storage?

Whispers of a No-Contract, Carrier-Jumping iPhone

thebonafortuna

I’m no expert, but I kind of doubt Apple will come out with even a dumbed down version of the iPhone. Apple squeezes incredibly high profit margins out of their mobile division, in part because the economies of scale for mass producing one device allow them to purchase those parts for cheap. It’s not as if demand for the iPhone has dropped off, and it doesn’t cost $600 anymore. Why even bother with a smaller/cheaper one?

For example, if they were making the iPhone 4 in one size – 32 GB – they’re ordering every device exactly the same, and the parts are that much cheaper. Make 20% of them in 16 GB size, and the 32 GB parts get more expensive, and they’re not getting anywhere near the same pricing on the 16 GB models. It would cost them more, and they wouldn’t realize much more profit because the phones are already subsidized by the carriers. Even if they cut out the 16 GB model all together, and went with all cloud storage (I’m sorry but that’s an insane proposition given current network and battery limitations), their bulk discount on the 32 GB model would still drop, therefore costing more, therefore Apple sees less profit per device.

And all that is ignoring the fact that Apple hates confusion in the market place. They’ve never sold a MacBook for less than $1000, because they’re not interested in hitting that lower price point. Nobody is holding out for a less capable, cheaper iPhone. iPhone sales go up every year. Why invest money in a low-yield product that market isn’t currently clamoring for?
http://hdustinbing.wordpress.com/ hdustinbing

thebonafortuna’s post is aperfect example of how having just alittle knowledge is worse than habving none. Bona obviously recalls his high school economics days of the economies of scale..but doesn’t realize that in this case, it would add an insignificant amount of added cost to produce
http://kenmomsy.wordpress.com kenmomsy

Fortunately I never had the privilege to attend any economic classes as a youngster. I do however think that there is a lesson to be learnt from tracfone and it’s subsidiaries, who service a market that is more interested in conscientious consumption, than it is in owning the latest toy. I think Apple can only gain more market by making their products more affordable. In my mind there’s a lot more folk out there that don’t have loads of disposable cash for gimmicks, but who will certainly show more interest if it was within their reach.