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Analyst predicts cheaper iPhone based on iPod Nano

Look for it in Q4, says JPMorgan's Kevin Chang

July 10, 2007 12:00 PM ET

Computerworld - Apple Inc. will follow up its debut iPhone with a cheaper version based on the iPod Nano, a JPMorgan financial analyst said yesterday, echoing comments last week by bloggers scouring the U.S. Patent and Trademark Office database.

Kevin Chang, a Taiwan-based analyst at New York's JPMorgan Chase & Co., said that Apple will release a less expensive iPhone in the fourth quarter, according to Reuters.

Chang, who based his forecast on unnamed sources in the supply channel and an Apple application with the U.S. Patent and Trademark Office filed last week, said a follow-on to the current iPhone could be based on the iPod Nano, Apple's flash drive-based music player. "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 cannibalizing iPod Nano," Chang told Reuters.

At $300, a scaled-down Nano-based iPhone might sell as many as 30 million to 40 million units in 2008, Chang argued. Apple CEO Steve Jobs has fixed the iPhone sales target through 2008 at 10 million handsets.

Apple's iPod Nano currently sells for between $149 and $249.

Chang's take comes after bloggers last week noticed a July 5 patent application titled "Touch pad with symbols based on mode" that, they theorized, could serve as the interface for an entry-level iPhone.

Both Unwired View and MyiTablet, for instance, noted that the patent described a touch pad-based device that would serve as only a phone and an iPod. Unlike the current iPhone, the cheaper alternative would not boast a large screen or allow Internet browsing.

The patent application spells out a touchpad, similar to the iPod's click-wheel, that would change modes -- and its display -- depending on the application. When in phone mode, for example, the circular touch pad could show dialing numbers in a style reminiscent of long-obsolete rotary phones. Switch to music mode and the touch screen reverts to a traditional iPod click-wheel for traversing artist or genre lists.

Apple introduced the iPhone on June 29 to fanfare and long lines of customers.



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