

The iPhone Nano Rumor Reborn: 1/3rd Smaller, Older Components, $200 No Contract - kiubo
http://techcrunch.com/2011/02/10/iphone-nano/

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us
There are several problems with this hypothesis. Apple has said it before that
they're getting more iPhone orders than they can manage to build in many
cases. At $625 per iPhone and they're selling like hotcakes on top of their
recent Verizon expansion, even if they could produce a lower cost iPhone, why
would they? The profit margin doesn't make sense and isn't typical of Apple.

Of course I could be wrong and Apple may do an iPhone nano but this would also
greatly diminish the user experience on the phone and apps experience by
minimizing the screen. If you've ever played on an iPad, you'll know many apps
work a lot better on the iPad. The screen size do make a difference. Shrinking
the iPhone doesn't seem to be helpful in this area.

Lastly, Apple is not known for making half assed products with cheap
components. Using older components doesn't equate to cutting costs low enough
for profit margins on a retail $200 phone to make sense when they're raping
$625 per phone as it is now. Would you do it? The economics just doesn't seem
to make sense here.

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6ren
Firstly, strategy. Apple launched the iPod shuffle, to help cover the market,
top to bottom. It's not just about increasing sales, it's also owning the
market, which denies oxygen to other entrants. It's strategic. However, to me,
this wouldn't seem to especially target android devices, as they tend to
mostly be at the high end (it seems to me).

Secondly, supply. The iPod is dying, so they'll have capacity coming online
there. Anyway, it's worth increasing capacity if it'll give you a strategic
advantage.

Thirdly, user experience. _The screens on the first three generations have a
resolution of 320 x 480 at 163 ppi, while that of iPhone 4 has a resolution of
640 x 960 at 326 ppi._ Therefore, they could make a physically smaller screen,
using the old resolution, which could run three generations of apps (plus
special-purpose ones).

You're right that making half-assed products is not the Apple way. The Apple
way is to take a weakness and turn it into a strength. The shuffle example
again: the lack of a display enabled it to be _tiny_ , and that's a plus. In
general, the iPod had _fewer_ features than its competitors. An "iPhone nano"
will do something similar, both in its technical capabilities and how it is
marketed. BTW, I think a tinier iPhone would be pretty cool in itself,
provided it still feels snappy to use.

Lastly, cost. I agree it might not be possible yet. Perhaps they could go two
generations back, or cut costs in a creative way. For example, a smaller
screen costs less, and also uses less power, so therefore needs a smaller
battery, which again costs less. Perhaps there'll be some cheaper way to do
things that is actually a benefit to the targeted customers? Another option is
for Apple to wear some loss, for a while, for the strategic advantage. It's
also plausible that they'll just wait a bit until it is affordable. It could
also be something really wild, like a voice-controlled phone, with no
display/controls at all! That would be parallel to the shuffle. It would also
be amazingly cool, but I'm not sure whether it would take off...

But one thing I'm sure of: trying to cover the market is on Apple's mind.
Whether they can do it yet is the question.

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pietrofmaggi
When I read this kind of article I can't think that the current cost of an
iPhone is less that $180[1] and it's sold at around $600-$700 without contract
around the world...

So how much has to cost a smaller iPhone to Apple to sell it at this price?

[1] [http://www.isuppli.com/Teardowns/News/Pages/New-iPhone-
Carri...](http://www.isuppli.com/Teardowns/News/Pages/New-iPhone-
Carries-171-85-Bill-of-Materials-IHS-iSuppli-Teardown-Reveals.aspx)

~~~
kiubo
While I'm not saying 600-700 is fair price, I'm sure a lot of money went into
R&D. I wouldn't doubt that R&D accounts for a significant portion of the
difference in price. It would be interesting to know how much profit they are
making on each device.

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kiubo
Which, if true, will bring even deeper market penetration. Never thought
iPhone discussions could sound so sleazy.

