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'iPhone nano' could swamp the mobile market; kill off rivals

By | February 14, 2011, 3:58am PST

Summary: Apple is reportedly working on a smaller, lighter version of their popular iPhone device, dubbed ‘iPhone nano’. Could this swamp the mobile market and kill off rival manufacturers?

As Android remains at the top spot for the world’s most used mobile operating system, Apple are reportedly designing cheaper, smaller iPhone-like devices to compete with Google’s mobile software.

iPhones are expensive, but arguably proportionate in price for what they can do. Arguably, both the iPhone and the BlackBerry devices are ruling the marketshare at present for their ability to do practically anything.

As Apple Insider reports:

“The new smaller iPhone is expected to priced cheap enough to be offered by carriers for free with a smaller subsidy, or in the ballpark of $300 unlocked. Rather than being a dumbed down ‘feature phone,’ the smaller iPhone is said to simply be “significantly lighter,” with a smaller edge-to-edge touch screen.”

The ‘cheaper iPhone’ could be sold to carriers at half the existing price of the regular iPhone, meaning greater subsidies to the end consumer. It could in effect also be an emerging handset for those in less economically developed areas of the world.

Though the partnership of Microsoft and Nokia to provide Nokia touch-handsets running Windows Phone 7 may not be able to take on the iPhone demographic, it is more aimed at attempting to knock a few chips away from Android.

But if Apple’s iPhone is already a dominating force in the mobile market, a less expensive iPhone-like device could put other mobile manufacturers out of business. Who would want a cheap Nokia phone at $99 when they could easily jump aboard the iPhone bandwagon and claim the social status for around about the same price?

The Generation Y is all about the iPhone. While it is clear on the ground that the standalone portable music player is not as important as an iPod combined with mobile calling technology, the iPhone still takes the top place as the contender of choice for younger consumers.

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Topics

Zack Whittaker, a criminologist who studied at the University of Kent, Canterbury, is a journalist, writer and broadcaster.

Disclosure

Zack Whittaker

I worked briefly with Microsoft UK in 2006 but no longer have any connection with the company. Regardless, I remain impartial and unbiased in my views.

I don't hold any stock or shares, investments or industrial secrets in any company, but have signed confidentiality agreements with a number of UK and U.S. organisations, whose names I am not at liberty to disclose.

I was involved with Kent Union, the University of Kent's student union, undertaking voluntary, non-salaried, elected positions between early 2009 and mid-2010.

No other company, body, government department, non-governmental organisation or third sector organisation employs me or pays me a salary in any capacity whatsoever.

As a freelance journalist, whenever expenses are given and taken by a company that is not CBS Interactive, these will be disclosed in each relevant post to ensure transparency.

I currently work with a UK law enforcement unit, but this is an entirely separate position which bears no connection to other work.

(Updated: 23rd October 2011)

Biography

Zack Whittaker

Zack Whittaker, criminologist who studied at the University of Kent, UK, is a journalist, writer and broadcaster.

After studying criminology at university, though still in his early-20's, he has already had a series unconventional work and voluntary positions. He has worked with researchers studying neurological illnesses like Tourette's syndrome (which he suffers from), has given lectures on the nature of disabilities in the public community, and occasionally ends up speaking on television and radio discussing the events of the day.

He first had academic work published at the age of 22, then still an undergraduate, and has been cited by a wide range of publications: from the Huffington Post, Business Insider, AllThingsDigital, The Atlantic Wire and CBS News.

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iPhone nano could swamp the mobile market, and spread further disrepute
Kolomboj 23rd Feb 2011
In the past, iPhoners with AT&T were reported to carry tracfones, just in case they actually needed some coverage. In lieu of the verizon iPhone this might change, although their network hasn't been challenged quite yet. A smaller version of the iPhone in my mind will have even worse signal capturing abilities than it's big predecessors. Which is great if you're a movil shareholder, but not cool for the users.......if you're serious about having a phone for business, and life.
i dont think it will cost half the price... and nano wont change the fact that there are some ppl which simply doesnt like iphone. I may be wrong but i dont see a nano iphone as something really useful. Its a smartphone not meant to make calls only. For regular use you need a screen at least the size it is today but anyway you can cut the price of the phone its easy you see carriers selling androids and others almost for nothing but i dont see ppl of "less economically developed areas of the world" buying a smartphone just because the phone is cheap. how about the monthly fee? phones are the least of their problem, carriers already push them at almost to none cost.
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Apple is pure HYPE nothing there
Uralbas Updated - 14th Feb 2011
Examples are:

the 4G will turn the tide around it didn't
the 4G on Verizon will give Apple Millions of new users in a day. (As of now 5 days later, nothing).

Most of the hype that led to the iPhone's popularity was driven by little innovation and Tons of hype. The Nano can make some dent because of the price. But Apple and its followers base their assumptions on that everyone wants Apple products.

Why was the 4G almost a dud. Why was the 4G on Verizon a dud. Simple Lack of innovation to backup the hype. Price is a key feature, but without innovation its just dead on arrival.

Android has excelled and trampled Apple's smartphone marketshare (and most likely these coming years, tablet share) because it provides more innovation than Apple does.

Examples are:

- Larger screen
- 3D screens
- Better multitasking
- Faster processors
- A LOT OF FREE Stuff.

Free has a nice ring to it for people that can't afford much. And in a recession a LOT of people can't afford much. Once you have tried Android and go over to Apple's kingdom, you love the speed (which is irrelevant with dual core processors) but miss all the other nice functionality Android provides that Apple doesn't.

- Flash
- Free GPS
- Real Multitasking
- More choices
- Freedom!

So until Apple addresses these issues, it will continue to bleed marketshare.

FYI..

When G1 arrived, I stated it would overcome the iPhone it has.
When 4G arrived I stated it was a fluke it was
When 4G Verizon came along I hinted that sales would not materialize, they have not
Back a year ago I stated Android would overtake iPhone by 2011 when everyone stated it would do so in 2014, it has.
I stated the Windows 7 phone would be a fluke, it has been.

The only thing i missed by a couple of months is when Android would overtake Apple's App share, stated it would be in Feb 2011, it will be later this year.

But so far, I've been on right on the money.

My take on the Nano, it may gain some market share, but to really turn the tide around, Apple has to change its philosophy, something that probably will never happen while Steve Jobs pride stands in the way.
@Uralbas

"When 4G Verizon came along I hinted that sales would not materialize, they have not"

First of all, I assume when you say the "4G Verizon" you mean the iPhone 4, not the 4G network. Assuming that:

Verizon stated that the pre-sales of the Verizon iPhone produced the largest number of first day phone sales in their history.

As far as the lack of crowds at the stores on actual first day of sales to "everybody", most people ordered online. Verizon has free overnight shipping, so why go wait in line? I guess Verizon customers are smarter than AT&T customers, or maybe AT&T customers are more concerned with being seen in line waiting to get their magical Apple device, I don't know.

That said, my wife now compares her brand new iPhone to my original Droid, and except for screen quality, is kind of disappointed in it. It also doesn't have the connectivity at home that my Droid and her old Moto Crave did, YES, she drops calls at home whereas she didn't before. Go figure.

I do agree with you as far as Android goes, however. I am in no hurry to trade my Droid for anything else.
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Wow. 100% wrong on all accounts.
Bruizer 14th Feb 2011
@Uralbas

Must be a new record. What is this 4G you are talking about?

As for the iPhone 4 on Verizon, it now represents more than 10% of Verizon's total smartphone share on their network. A dud. Thanks the the delusional humor.
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Well...
olePigeon 14th Feb 2011
"the 4G on Verizon will give Apple Millions of new users in a day. (As of now 5 days later, nothing)."

Well, it's hard to get exact sales figures, but apparently Apple had prepared 2 million CDMA iPhones for Verizon's pre-order sale. Verizon had sold out in 3 hours its first batch of 500,000 iPhones. Over a period of 17 hours, Verizon had sold out of the 2 million CDMA pre-order iPhones. That's a pretty impressive feat by any standard.

"Most of the hype that led to the iPhone's popularity was driven by little innovation and Tons of hype."

Apple's innovation was an intuitive, touch-centric OS and expansive app store, all bundled into one package. Apple wasn't the first to the market with many of these concepts, but they improved on them and developed an effective model that made for a great user experience.

Nearly every company now makes a phone that looks and functions eerily similar to Apple's iPhone. That isn't by mistake.

"Android has excelled and trampled Apple's smartphone marketshare (and most likely these coming years, tablet share) because it provides more innovation than Apple does."

I would argue it's because Android works well enough, and Google followed Microsoft's business plan by licensing an OS to every handset maker instead of making a phone themselves. It is certainly not nearly as polished as iOS, in my opinion.

Collectively, Android based products have sold more; however, when you compare phone sales by individual companies, the iPhone outsells them by a significant margin.

"- Flash"

I've blocked flash content on my desktop computer for years, and I've never missed it. The only reason you need Flash is for porn and YouTube, and you don't need it for YouTube anymore. Very, very few times have I run into a website that I needed to access that used Flash.

- Free GPS

GPS is free in general, it's the software that usually costs a lot of money. iPhone has GPS via Google.

"- Real Multitasking"

Not sure what to make of that. They both have multitasking, implemented in different ways, with each respective system providing advantages and disadvantages.

"- More choices
- Freedom!"


I think more options and vendor freedom can be a good thing, but you also have to deal with more forked versions of the OS that aren't compatible, side-loaded crapware and bloatware, and no upgrade path for even newer phones.

Both the open Android and the relatively closed iOS have their merits.
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@Uralbas Agreed 100%

I can only laugh at some of the other replies to your comment. Its like the iPhone crowd has fallen completely into just making up statistics at this point.

The iPhone is already 10% of Verizon subscribers? If that were true it would be pastered everywhere by now.

It broke Verizon first day sales records? Has anyone bothered to ask what the record was before? The last phone I remember them talking about was the 200,000 Incredible that sold in 2 days before stock ran out. Well thats 100,000 the first day. And every figure I have seen has put the highest sales figure of iPhones at 500,000 but some have said realistically it may be more around 100,000. Thats great and record setting at all but in the grand scheme of what people think is going to happen with the iPhone its nothing at all.

Multitasking? No matter what Jobs tells you the iPhone does not multitask like a real computer. It freezes apps when you leave them. So those apps are not updating while you're doing something else. You can't use a third party IM app and stay connected while you do something else.

Fact is the iPhone on Verizon isn't going to be anywhere near the Android killer some people thought it would be. Reality has struck. All the fabricated superiority of iOS don't add up side by side in real life to Android. Its simply the better OS and people are making that known with their purchases by a large margin.

@babyboomer57 Your wife's experience hasn't been the first I've heard of people comparing their new Verizon iPhone to an Android device. Mostly I'm hearing people are disappointed when comparing it to an Android device.
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@Uralbas
You're looking at the shiny stuff that is meaningless.
Four years ago, Apple had ZERO marketshare and ZERO profits in the cell phone business.
Now it has 4% of the entire world's cell phone market (not just smartphones) and 50% of the entire cell phone market's profits.

All the stuff you are talking about is irrelevant.

That's why LG and Moto are still struggling to make a profit in Mobile, Nokia sold it's soul to the devil, HP ditched WM7, RIM is desperately trying to switch OSes and Samsung and all the other cell phone OEMs still aren't making any more money than they were before Android.
@Uralbas

Bit Rot
@Uralbas - But it will be many years, if ever that Android will overtake iPhone / iOS. Apple already has 210 million devices in use, Android, 66 million.

The Android has been a huge failure so far, customers and developers absolutely hate the platform. It will end up like Linux with about 1% share in the coming years.

So you haven't gotten any of your predictions right.
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status symbol
JABBER_WOLF 14th Feb 2011
@bnlf
Its a nano status symbol- just cheaper and lesser status.
I honestly dont know who they are selling that too?
To those that wanna show off they have an iphone - but a lesser version?!
@bnlf - No, you could make an iPhone with exactly half the screen size, but the same resolution, it will sell like hotcakes.

Android has pretty much died now that the iPhone available on Verizon, customers and developers HATE the Android devices, so it's good they are being phased out.
olePigeon - faux multitasking. The iPhone with iOS 4.2 won't multitask even downloading of updated apps the instant you click on ANY app to load. Not even the calendar. It's a bit of a, what's that word..., "joke".
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It won't work!
General C# 14th Feb 2011
This is one rumor that doesn't sound good at all. I mean could you imagine using the puny on screen keyboard? I call bull on this one. Could it be that there'd be 2 iphones a 3.5" and a 4.0"? I just don't see it working too well on a smaller screen.
@General C#

The ideas of some people just confuse me. There are lots of successful 3.3" screen phones out there and in the past. Having carried a Droid X for 2 weeks, the thing was just clumsy and it was just slightly larger than the iPhone (lots thicker due to that gaudy camera bump).

To me, the limit on practical phone screen size is 4.0".
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This is how I see it and it is really not that hard to imagine.

Apple already sells the iPhone GS for $49 through AT&T. They could build a similar spec'd but even cheaper model that uses the combo CDMA/GSM chip which:
1. Could be sold unlocked/unsubsidized for $200 -$300 (like an iPod touch). Many, many people would like a previous generation iPHone WITHOUT the ridiculous data-contracts. They will just use wifi for data. If you don't believe me, just try to buy a used, unlocked iPhone GS and see how much it costs. Often over $400!

2. Could still be sold by the telcos for "free" with the obligatory two year contract.

Of course Google tried this with the Nexus but failed miserably, but Apple's unlocked iPhone wouldn't cost $600, would have plenty of retail distribution, plenty of customer support and a huge ecosystem. And Apple has real hardware chops. Google does not.

However, Apple will have at least the iPhone GS screen resolution on this model and enough processing power/memory to take advantage of the most app store apps. They will not ditch the app ecosystem just to make a cheaper iPhone. That's what Nokia would do. But a cheap, unlocked iPhone would be just one more way Apple could make an end-run around the telcos.

The perfect entry level iPhone for developing countries and developers.
I'm disappointed that ZDnet published this story with its rather extreme title. It is very doubtful that one product will "kill off" all others. Zack, there is more involved in mobile communications than fashion.
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Contributr
@mtngoat73 For the Gen Y perspective, social status and fashion are key, intrinsic elements to technology.
@zwhittaker
Sorry Zack, I have to agree with mtngoat73 - this article is all hype and no substance. Seems more like a fanboy post than an analyst statement.
@zwhittaker

Which means technology is simply a part of everyday life.
@zwhittaker

Regular cellphones used to imply social status too, now they are everywhere and they are no longer raising any eyebrows. Everyone has one.
The same thing is happening to smartphones. Nobody is impressed by the fact that you own an iPhone today, why would they be impressed by you owning a cheaper "iPhone lite"?
@zwhittaker You've clearly have never heard a young person say that something is "overrated". A lot of kids and young adults couldn't care about Apple products, most people hate iTunes and in fact don't like Apple's stifling control over their products. Some young ones that I know have Android phones and love them and number of others have BlackBerry's and love them too.

People need to get in their heads that Apple is not synonymous with fashion. If anything it's becoming synonymous with ignorance, fanaticism, and blind faith.
@mtngoat73

Agreed. I declare a ban on the term "iPhone Killer" also. Nothing can kill an iPhone (except for a drop on a hard surface)
@mtngoat73 Agreed. While a smaller iPhone would be popular, it's not going to kill anything off. Just like Google won't kill of Apple or Nokia/MSFT and vice versa.

Also, for the last time, it's "Generation Y" not "THE Generation Y"! No one says "the Generation X" - ever - so why start with Gen Y?

Dear ZDNet, please stop publishing every article that pops out when the children bash their heads against the keyboard. It just depresses everyone.
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android is far superior
herbweil 14th Feb 2011
And won't be obsolete the way windows and apple plans each time they introduce a new release
@herbweil Adorable.
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That is too funny.
Bruizer 14th Feb 2011
@herbweil

With most Android phones being abandoned by their manufacturers shortly after release, talk about obsolete.

How is that update to Gingerbread coming for the Nexus 1? Dude, this is Google's "own" phone and they cannot get it updated within a week of release of the OS?

How about a >2.x upgrade for the Cliq?

How is that OTA update for the wildly popular Droid to take it to Gingerbread?

Or even some Froyo love going to the Galaxy S line OTA?

Android phones are "obsolete" and forgotten while they are still shipping.

Yep, if you want to upgrade your 9 month old Android's OS without resorting to rooting, just buy new hardware.
@Bruizer

"How is that OTA update for the wildly popular Droid to take it to Gingerbread?"

There are three Gingerbread ROMs out now (that I know of) and NONE of them run worth a crap on the original Droid. Apparently the 256meg RAM just isn't cutting it. It will run, but runs itself out of memory over the course of the day and just pretty much stops working until you reboot.

I'll try it again after ChevyNo1 gets a Gingerbread version of Simply Stunning. If he can't make it work right, I'll just give up and not worry about it until time to upgrade comes along. My Droid works fine like it is now, and does everything I need it to, PLUS some.

We really can't complain - two version updates on the first Android phone in one year. How many PC's can be upgraded to two newer versions of Windows without problems? Not many, unless you buy the most current, fastest hardware available every time you buy/build a new system. Why should Phones be any different? Having to upgrade your phone every two years means new two year contracts for the carriers. It's called "business". They don't provide their services because they like you, they like your money!
This will not work in the developing world. China maybe, but the subcontinent response would be lukewarm at best. I would say that this would also extend to the south east Asian demographic. Assuming 2 billion people and a pool of about 5% of the population being potential customers due to the cost of the device. People buy products that can easily be serviced. Apple is simply invisible here. So, they can make a killing in the west, but it will be the wilderness in this region.
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This rumor has been around ever since the introduction of the original iPhone...
"The Generation Y is all about the iPhone."

Horrible grammar and no it's not.

"the iPhone still takes the top place as the contender of choice for younger consumers."

Not according to the statistics that Android is on top.
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Really, Zack????
babyboomer57 14th Feb 2011
You said: "Who would want a cheap Nokia phone at $99 when they could easily jump aboard the iPhone bandwagon and claim the social status for around about the same price?"

Hmmm. I don't think I would want to be the one with the cheap-O iPhone and have to listen to my friends say: Hey look, Zack was too cheap to get a REAL iPhone. What a loser!" Social status now = 0.

Just sayin'.
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No it will not
Peter Perry 14th Feb 2011
People actually like the freedom that android provides.
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Its a joke right?
JABBER_WOLF 14th Feb 2011
What can u do on it?
iphone sells itself as a status symnbol.
the iphone nano = less useful, and less status?!
What market would buy the phone that says "im a sheep - but actually an even lesser sheep)
Jokes, right?

Some people a) don't have iTunes and b) don't want to have to tether their phone to their computer.

Android solves that, so no, Android won't go away.

Stupid article, click bait.
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No, Android won't go away, but its OEMs could be in for a very sorry existence. With only 4% market share, Apple is already sucking up 50% of the mobile profits in the ENTIRE industry, not just the smart phone segment. What if an iPhone nano doubled that market-share? That would be devastating to the Android OEMs.

Sure, Google still prints money with its mobile search business, but that doesn't really help the OEMs now, does it? Kind of like how MS sucks the life out of the PC OEMs while they beat each other's brains out.

I see a $200 - $300 iPhone GS-level phone with a dual GSM/CDMA and sold with no-contract as a distinct and rather frightening possibility for most of the handset OEMs.
What Apple dominance do you people keep speaking of. Android has been blowing iPhones off the map since last year. Apple is well behind Google in smartphones now worldwide and stagnant. Android is the only thing growing.
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@storm14k
Apple is dominating the industry by taking in most of the profits. And yes, Apple is still growing.

Yes, Android market share is growing meteorically but the Android OEMs aren't any better off than they were before Android. They've simply swapped out their old dumb OSes for Android but nothing significant has changed. In fact LG lost money and MOTO issued a profit warning last quarter. That's not what you would expect given Android's absolutely stunning marketshare rise. Usually the rising tide lifts all boats.

Android has sucked the life out of RIM and Nokia, not Apple. Apple is still trying to ramp up production of the iPhone4 which is over six months old to meet demand and Verizon sold out of the iPhone4 in a few hours even though the model is SIX MONTHS OLD and everyone knows a new model will be here in June.
I wish Apple would come out with some wonder phone and hurry up and kill off Android. I get sick of seeing all those hundreds of weird Android smartphone models. Android smartphone designers must be getting headaches on how to make their smartphone design different from all the rest. It makes my head spin when I think of the amount of fragmentation that platform has. A new Android smartphone every freaking week with different UIs and loaded with carrier bloatware. You'd think consumers would get wise that Android is just an OS for Google to get ad clicks on. I sure hope Apple knows what it's doing or this cheapo iPhone could backfire in their face if consumers stop buying the more expensive iPhones. I hope these rumors aren't true and Apple just keeps the same model iPhone with a faster processor, longer battery life and some free cloud storage. If consumers want to buy Android smartphones, that's their own bad luck.
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Behold Android...
Hardik Upadhyay 18th Feb 2011
If this really comes true.. Android seriously needs to do a fundamental change in their OS.

They are able to capture the market only because they are able to launch a cheap range device. Once apple does that, they are gone...
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It wouldn't be the same social status...
HypnoToad72 22nd Feb 2011
(A) it's a smaller-sized phone
(B) I prefer a phone to work as a phone. Nokia's reception quality is fantastic with no dropped calls, unlike my iPhone 3GS...
(C) Social status is for emotional insecure lemmings
(D) A smaller touch screen will be mighty fun to navigate... (hint: Not really... so they will likely incorporate more voice controls and "you're welcome" for the free QC and marketing advice...)
First of all it won't be half the price. Secondly people can already get an iPhone 3gs for $50. Lastly, the iPhone already has a small.screen so an even smaller screen will make it literally useless.
Also "generation y" is not about the iPhone, its about having what is regarded as the best. The Evo 4G is the best phone out currently. The iPhone cannot compete with it unless you are a fanboi. At the university I attend, I see many more evos than anything else. Where I saw many iPhones previously, it was still not as great as the penetration of the evo. While talking to a friend that attends another university, he said that he has seen the same thing.
I have personally sat in a class of 20 people, and saw 6 evos not including mine. With only 2 iPhones that I know of. And the rest having not shown their phone or it being a bb or a different android device mostly.
In the past, iPhoners with AT&T were reported to carry tracfones, just in case they actually needed some coverage. In lieu of the verizon iPhone this might change, although their network hasn't been challenged quite yet. A smaller version of the iPhone in my mind will have even worse signal capturing abilities than it's big predecessors. Which is great if you're a movil shareholder, but not cool for the users.......if you're serious about having a phone for business, and life.

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