Cheaper iPhone coming?

Summary:Apple may be cutting production plans for the iPhone and/or prices. Connecting a few dots on various Apple items today TheStreet.

Apple may be cutting production plans for the iPhone and/or prices.

Connecting a few dots on various Apple items today TheStreet.com's Scott Moritz reports that the company may cut its iPhone production plans from 9 million units to 4.5 million units.

This report based on a trading note from Miller Tabak may be true given that Apple is projecting 1 million iPhone units sold in the current quarter. Why hold the inventory?

But there may not be a lot of oomph in the Miller Tabak note. Especially when you consider another research note from RBC analyst Mike Abramsky.

Abramsky said a discussion Greg Joswiak, VP, Worldwide iPod and iPhone Product Marketing "sharpened our views on iPhone momentum and strategy." Joswiak didn't disclose product plans, but Abramsky came away with the following impression in order of importance.

A cheaper iPhone is coming. Abramsky wrote in a research note:

"While not facing pressure to do so, we speculate initially Apple will differentiate its iPhone lineup not by features, but by price and memory capacity, similar to its iPod lineup, simplifying market positioning. This affirms our view of a lower priced ($349-399) iPhone CYQ4/Q1, with a higher priced version at higher capacity, to expand its market opportunity."

If true this pricing strategy may jive with Moritz's report. Wouldn't Apple want to cut production of current iPhones if it was going to launch a cheaper version in just a few months?

Widgets will be played up. Abramsky notes that iPhone's software will become the main selling point. P2P apps, home networking and Leopard integration with iLife are all possible.

Europe service is coming soon, but it won't be 3G. This item is a major issue for Europe, which is mostly 3G. Abramsky says Apple may bank on a Wi-Fi workaround in Europe.

Also on the Apple front, the company said it has sold 3 billion songs on iTunes. Nice number, but not sure what all the fuss is about.

Topics: Apple, iPhone, Mobility

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Larry Dignan is Editor in Chief of ZDNet and SmartPlanet as well as Editorial Director of ZDNet's sister site TechRepublic. He was most recently Executive Editor of News and Blogs at ZDNet. Prior to that he was executive news editor at eWeek and news editor at Baseline. He also served as the East Coast news editor and finance editor at CN... Full Bio

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