Further corroborating Bloomberg’s news of a smaller, less expensive iPhone, the Wall Street Journal is reporting that Apple may be adding an entirely new iPhone to better compete with other cheaper smartphones that are priced close to free on a two-year contract. The smaller iPhone, codenamed N97, is said to be about half the size of the current iPhone 4 according to those who have seen prototypes of the device, and would help Apple compete against Google’s Android smartphones, which are available at varying price points on- and off-contract.
The current generation iPhone 4 is in excess of $600 in areas where the device is available contract-free and costs as little as $199 on a two-year contract with subsidies from carriers such as AT&T and Verizon Wireless. With a cheaper iPhone, analysts expect the device to cost between $200-$300 contract-free and could be priced at $0 with a two-year agreement, making it competitive with low-cost Android handsets and tapping into a demographic that Apple would not have otherwise reached.
Along with the phone, Apple may be tapping into its experiences with the cloud to deliver value while keeping costs low. Rather than outfitting the device with massive amounts of memory–the iPhone 4 comes in either 16 GB or 32 GB of internal, non-augmentable storage–Apple will introduce a new online digital locker service as part of a revamped Mobile Me that will make it possible for users to carry around copious amounts of content, such as photos, music, and videos, with them without needing local on-board storage. That service would be made available for free.
According to WSJ, the iPhone Nano and the new digital locker service are expected to be unveiled this summer, placing it in the same time frame as Apple’s historic date for the company’s flagship iPhone smartphone launch. It’s unclear what Apple will be calling the smaller iPhone product, if and when it will be released, but for now we will be referring to it as the iPhone Nano.
In addition to the multiple Android phones on the market, the new iPhone Nano would also help Apple compete in the low-cost phone segment that HP, via Palm, will be competing with the webOS-powered Veer.