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iPhone Nano the End of Apple

Posted: February 9th, 2009 | Author: | Filed under: Apple, Companies, iPhone | Tags: , , , | No Comments »

I think for Apple to build an iPhone nano would be an indicator that the end of Apple is near.  To be clear, I do not think that Apple will build any such beast.  However, let’s postulate a scenario where Apple builds such a thing.

Firstly, let’s look at a picture of where the iPhone currently is.  Apple has a device that for all intents and purposes is $200 that is selling at a brisk clip.  Not to mention that people are snapping up applications at an even more intense rate.  All of this is making Apple rich.  There are several questions that occur to me when thinking about a conceptual iPhone Nano.

  1. What does Apple have to gain from such a device
  2. How do they account for it technically
  3. What type of person would buy such a device, and how do they fit into Apple’s core demographic
  4. What sort of hardware would be in the iPhone nano

Let’s talk about number one.  What does Apple have to gain?  If Apple were to build this mythical device, and it were to be smaller, etc… How could they build it cost effectively, their parts chain is tied up in 320 x 480, 120 dpi screens, ARM-1178J CPUs, etc…  They would have to negotiate and buy a bunch of different parts.  Tooling up for a different device line would be expensive right now.  Then, assuming they spent the money on that.  They would need a sufficiently different software stack for this device.  That would cost money as well, then lets say that they pulled off the miraculous and got the iPhone nano’s manufacturer’s cost down to $299 ( which would be amazing ).  Would AT&T really do another hefty subsidy, to get the cost of the device down to$99 or free when their bottom line is already hurting from the steep discounts on the iPhone 3G?  The answer is no, it doesn’t make sense.

On the technical side, how do they account for an iPhone nano?  Assuming that the device would have a different form factor, most applications would have to be rewritten, not necessarily for technical reasons if they used interface builder when creating their UIs, but for usability reasons.  If the screen had a much greater density, it would be harder for the user to see text, etc… So developers would have to make their fonts larger and change their navigation and text entry systems if it used a click wheel.  That really makes the AppStore out.  This makes no sense.

Who would buy an iPhone nano that wouldn’t buy an iPhone?  This is interesting.  The iPhone 3G is doing well even with the income challenged segment, so who would buy the iPhone nano?  Maybe kids, perhaps teenagers, but without the AppStore, what is the draw over a normal iPod?  Or the iPod touch for that matter.  Maybe the extremely impoverished would consider it as a stretch, but if you are that challenged for cash how would you afford any monthly plan with data attached?  Does AT&T want credit challenged, cash strapped customers?  Does Apple want to serve the bottom of the market, even though they don’t in any other case?  No, they don’t.

Finally, what sort of hardware would be in a thing like this?  Well, they could use the same chips and just underclock them, maybe they would have a smaller touch screen, but then a higher density touch screen would be more expensive, and modifying the software to fit a smaller enclosure doesn’t make sense.  Perhaps the iPhone nano wouldn’t necessarily be smaller, but even then with a hardware configuration like 2 or 4 GB of RAM, the ARM CPU underclocked to like 35o MHz to control heat, maybe 64 MB of RAM, you start to have a device that is going to have a hard time with SD video, let alone the 480p stuff you can get now, so Apple would start to lose money on media sales.

Apple is not in business to lose money.  The iPhone nano idea would just be a dog.  If Apple did do something like this I would advise everyone to get your money out of the stock, that ship is headed down.  It would indicate panic, and an irrational view of the market, as well as an abandoning of the company’s core values.  

In the absence of an iPhone nano, what is the iPhone 2,1 that is appearing in the strings in the 2.2.1 firmware?  Well, obviously it has been in development for quite some time since the first time the string appeared was in the 2.0 firmware.   Apple is not a company that deviates from its patterns, so let’s look at the mac laptop to determine what they might do.  

Apple typically will announce a technology that is at the top of their pricing structure, then as newer equipment comes out, they will drop that item down into the next tier down, until they have about 3 items.  At that point the technology that used to be new will be pushed out of their product line.  Right now there is one iPhone.  What is likely to happen is that they are likely to release an iPhone Pro.  It will probably come in 32 and 64 MB storage units, have 256 MB of DRAM, and feature an ARMv6K CPU ( ARM11 MP Core ) with 2 or 4 cores.  The iPhone Pro would feature iPhone OS 3.0 which would allow full background processes that the user could kill if necessary.  The pricing would probably look something like this.

  • iPhone 3G 16 GB – $199
  • iPhone Pro 32 GB ( 2-core ) – $299
  • iPhone Pro 64 GB ( 4-core ) – $399

I’d expect the form factor to be largely unchanged, with the same screen, shape, size and battery life.  That is what makes sense, that is Apple’s style.  It would then enable them to keep the high-margin, high-price item in their lineup.  For Apple, the iPhone 3G is a little too cheap.  It would be strange for them not to have 3 SKUs for the iPhone and the iPod Touch.