Apple plans cheaper, Nano-based phone
Chang said follow to iPhone could be priced at $300 or lower
Reuters
Updated: 2:52 p.m. MT July 9, 2007
Apple plans to launch a cheaper version of the iPhone in the fourth quarter
that could be based on the ultra-slim iPod Nano music player, according to
a JP Morgan report.

Kevin Chang, a JP Morgan analyst based in Taiwan, cited people in the
supply channel that he did not name and an application with the U.S. Patent
and Trademark office for his report.

Apple filed a patent application document that refers to a multifunctional
handheld device with a circular touch pad control, similar to the Nano’s
scroll wheel.

Apple did not respond to requests for comment.

Long lines of people turned out on June 29 when U.S. sales began for the
iPhone, a mobile phone with a music player and Web browser. Analysts have
estimated that sales in the first weekend were as high as 700,000 units.

Chang said a way to follow up the iPhone with a cheaper version would be to
convert the Nano into a phone and price it at $300 or lower. The iPhone
sells for $500 and $600, depending on storage space.

“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,” he said noting that the new phone could
have “rather limited functionality.”

Because of the anticipated lower price, 2008 sales of 30 million to 40
million units “is achievable,” Chang said.

This would be a much larger volume than is expected of the first iPhone,
Apple has targeted sales of 10 million units in 2008, which would give it a
1 percent share of the global market.


Sales of the iPhone are expected to be limited to a small percentage of the
market due to its high price tag, particularly in the United States where
85 percent of consumers tend to spend $100 or less on cell phones.

But analysts predict that a cheaper phone from Apple, which leads the
digital music player market, could pose a much bigger threat to
long-established phone makers such as Nokia, Motorola, Samsung Electronics
and Sony Ericsson, owned by Sony and Ericsson.

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