Is Apple Working on an iPhone Nano? [Updated]

Apple iPhone Nano in Development

In the ever so frivolous world of Apple rumors, the most recent hails from Bloomberg stating that Apple is said to be working on a smaller, cheaper iPhone. The idea is that Apple is creating a new mobile handset to compete with other phones of similar stature in the market.

Bloomberg's source says the device will hold a $200 price ticket, without a contractual obligation. The lower price is rumored to be achieved by using the same parts the current iPhone uses, alternative the next generation of updated hardware that will most likely exist in the iPhone 5. Older components decrease in value over time, making it cheaper to build a device with those parts.The "iPhone Nano" is also assumed to be one-third smaller than the regular iPhone, be without a physical home button, and ship with a dual-mode feature to allow the device to work on either GSM (AT&T) or CDMA (Verizon) carriers.

When breaking down each potential feature of the rumored smaller iPhone, it seems as though the idea of an iPhone Nano was fabricated out of a combination of the rumors that have been tossed around as of late.

Every iPhone gets a price cut when the newer versions come out each year, so that could explain the idea of a cheaper model. For example, right now you can buy the iPhone 3GS for $49 with contract.

The dual-mode phone idea has been tossed around since the confirmation of the Verizon iPhone as well, and isn't something that would solely spawn the idea of a smaller iPhone.

Rumor of the device not having a home button was most likely spawned from a discovery within the iOS 4.3 beta. Last month, developers found evidence of multi-touch gestures that control the same uses of the home button which could render the button irrelevant. This sparked up rumors of future iPad and iPhone devices being without a home button, and the gestures code is now non-existent in the most recent build of the 4.3 beta.

As for competition, Apple doesn't need to make a cheap phone to rival that market. They still hold the top spot with smartphones and it seems unlikely that they'd want to take a step back with a new product instead of moving forward.

None of the said features of the potential smaller iPhone come off as solid evidence since they are a combination of recycled rumors. The only stand-alone bullet point is the unnamed source stating they have seen the device, a familiar line that doesn't exactly hold up. Whatever the case may be, we should know for sure this Summer if Apple continues the typical time-frame for their iPhone announcements.

What are your thoughts on an iPhone Nano? Is there a need for one in the mobile market? Do you think the idea is just fabricated and false? Let us know in the comments!

[Update] The New York Times reports that Apple is not working on a smaller iPhone, despite the spreading reports, though they do say a cheaper version is possible.

But contrary to published reports, Apple is not currently developing a smaller iPhone, according to people briefed on Apple's plans who requested anonymity because the plans are confidential.

A smaller phone would mean a smaller screen, which would force developers to modify their applications to fit the screen real estate. This is something Apple would want to avoid. A cheaper device is said to be possible while still maintaining the normal size by using different components on the inside, but it is confirmed that the iPhone 4 could become the $49 device once the iPhone 5 is released.

Source: Bloomberg, New York Times via Mac Rumors

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