Apple Is Developing a Cheaper Line of Half-Size iPhones

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Photo: Jed Egan

Why wait for the competition when you can just knock off yourself? Apple is working on a line of less-expensive iPhones with prototypes at about half the size of the iPhone 4. The device, code name N97, would be sold to carriers for half the price of the main iPhones. With subsidies, that means consumers can buy these iPhone minis for as little as $199 with a two-year contract. (The lowest end of the iPhone 4 starts at $199 before a data, voice, and messaging plan.) This development means Apple, which typically competes on quality, not price, could enter the same mass-market range as rival smartphones. According to The Wall Street Journal, prototypes for the iPhone nano are "significantly lighter than the iPhone 4 and had an edge-to-edge screen that could be manipulated by touch, as well as a virtual keyboard and voice-based navigation."

In other competition-killing moves, Apple is considering revamping its online storage service. Right now, subscriptions to MobileMe, which lets users store mobile data in a central location and sync up calendars and contacts across computers and other devices, comes with a prohibitive $99 subscription fee. Apple is considering making "MobileMe" a free school "locker" for photos, music, and videos, which means devices wouldn't need to carry as much memory. (All the better for teeny, tiny smartphones.) The new version of MobileMe would let users access their iTunes libraries with an iPhone or iPad without requiring that it be synced up by cable with a computer.

Naturally, Apple, which has a penchant for making big announcements while the rest of the industry is gathered elsewhere, timed the Journal's lengthy confirmation of iPhone nano rumors to the Mobile World Congress in Barcelona, where the buzz was supposed to be about Nokia's recent announcement that it would adopt Microsoft's Windows Phone as its main operating system. Although Google vice-president Vic Gundotra probably already covered sentiment about the Nokia-Microsoft partnership with his tweet, "Two turkeys do not make an eagle."

If Apple's secret plans sound like something out of the Steve Jobs How to Embarrass and Decimate the Competition in Seven Easy Steps playbook, that's because Jobs has been closely involved with the effort from home. Any tech execs that breathed a small sigh of relief when Jobs announced his medical leave in January should start hyperventilating.

Less-Pricey iPhone in the Works [WSJ]