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iPhone Nano Binned - Cheap iPhone On The Way

David Gilbert


iPhone Nano Binned - Cheap iPhone On The Way

Remember last week we brought you news of an iPhone Nano? Well you’ll have to get that idea out of your head as it is reported today that the cheaper iPhone will not be smaller but will be……well cheaper.

A lengthy report in today’s New York Times states that the fruity Cupertino residents will be bringing a similar sized iPhone to the market but with cheaper components and therefore at a lower price, aimed at a sector of the market Apple has previously not targeted. The NYT quotes “people briefed on Apple’s plans” who of course have to remain anonymous. Last week it was Bloomberg quoting sources regarding a scaled down version of the iPhone and those sources claimed to actually have seen a model. Of course this could have been one of numerous designs Apple has been playing with and could now be consigned to the dustbin.

The NYT sources say that the smaller iPhone would not necessarily be cheaper to manufacturer and would be more difficult to operate. Another problem with a smaller screen would mean developers having to re-write a lot of apps, which is a situation Apple is looking to avoid. However, in an effort to make the full-size model cheaper Apple is looking at changing the internal tech to the most cost-effective components: “Although the innards of the phone, including memory size or camera quality, could change to offer a less expensive model, the size of the device would not vary,” said one of the sources who worked on a number of devices.

Another source claims that MobileMe, the online photo, music and file sharing system which currently costs $100-a-year, will be free and allow users to sync their files wirelessly. “The goal is that your photos and other media content will eventually just sync across all your Apple devices without people having to do anything,” the source said. Analysts claimed in the NYT report that a low-cost iPhone could help Apple extend its market reach by as much as six times. This would obviously be a very attractive proposition for Apple and with increased competition in the smartphone space from Android devices, often at much lower prices, it would seem like a natural progression for Apple to expand its options.

Sources: New York Times

Russell Peto

February 18, 2011, 5:28 pm

Something about this doesn't sit right. Don't we already have a cheaper iPhone, the 3Gs?

Energizer Bunny

February 18, 2011, 6:08 pm

"aimed at a sector of the market Apple has previously not targeted"

Animals? Plants?


February 18, 2011, 6:10 pm

Quelle surprise. I've always been sceptical of the mythical "iPhone nano". So what they're planning to do, basically, is repackage the 3GS (less RAM, slower CPU, cheaper, lower res screen than iPhone 4, but compatible with all iPhone apps), maybe slap on a Facetime camera, market it as a new "iPhone lite" or something and sell it at a cheaper price to get into the mid-range? Sounds like a pretty good plan to me.

nirelandman 1

February 18, 2011, 7:22 pm

I don't know about the other TR readers, but please please stop referring to Apple as "the fruity company" or "fruity Cupertino residents". That word fruity in there - Cringe-worthy stuff. Though other than that carry on as I otherwise like the news articles!

"Fruity Company":



February 18, 2011, 7:36 pm

If people are only buying inferior apple products because of the badge. Who is going to want one with lite or whatever on it?

Geoff Richards

February 18, 2011, 7:47 pm

The plot thickens...

This plan is not without risks. For example, how many existing iPhone owners could "make do" with a cheaper model instead? I'm pretty sure they're not all paying £40 a month because they want to. Choosing to own an iPhone has always been pretty-pricey-or-not-at-all.

There's then the challenge of differentiating the low-end vs high-end models so that said cannibilisation doesn't happen. The top model must also still be lusty-worthy enough to encourage upgrades.

Let's also not forget that while they might reduce the BOM (bill of materials) by using non-Retina displays, less internal storage etc, the major factor of whether any iPhone is "cheaper" is the margin that Apple decides to make on it. Estimates suggest they trouser several hundred quid per unit, so they could sell it for less just by making less profit.

But then (my favourite) Price Elasticity kicks in: will the increase in sales of a cheaper model outweigh the sacrificed profit?

Oh, and that's before you get to Android's millstone: platform fragmentation. Can Apple keep both users and developers happy with two-tiered iOS hardware?


February 18, 2011, 8:21 pm


People buy Apple products, despite the high cost, because they want the best. The only reason to buy Android phones is to save money. Who wouldn't swap even a decent Android phone like a Nexus S for an iPhone 4 in a heartbeat, if offered a straight swap?

Apple could take a lot of business away from Android devices if they offered a cheaper version. People like the App Store, the huge selection of games, the great media player and the regular OS updates (without having to root their phone). The problem is what could an iPhone 'nano' be that the existing 3GS 8GB isn't? It must run iOS 4.3 and be compatible with Apps, so basically needs 3GS hardware, but it also needs to be no more than £300 SIM-free. One way of avoiding cannibalisation would have to be style it as obviously poverty-spec e.g. white / black polycarbonate body, not quite as slim and so on, similar to the difference between the MacBook and Pro. Perhaps last-year's 3GS still looks too nice.


February 18, 2011, 8:32 pm

I think (as Geoff says), that Apple have to be very careful to differentiate their top end from this possible low end model. I own the iPhone 4 and love the thing, but would I simply 'downgrade' to a cheaper version if it was just a slightly scaled back 3GS? Toughie.

Can see it working in a big way though. An iPhone Nano for £200 or free on a decently priced contract? Hell, I'm almost certain my wife would have one, and my Mum!

Another thing is that would Apple lose it's 'cool' factor if literally everyone had one? What about the Razr effect? It doesn't bother me and it's not that they're not ubiquitous enough anyway....it's just it would most likely bother some.


February 18, 2011, 8:34 pm

Also, the problem with re-using last-year's design as the new low end is that while it saves Apple the cost of a redesign, it hardly says 'low-end'. I.e. it doesn't make you look cheap. You just look like someone with a 16GB 3GS that's part-way through an 18/24 month contract. Apple need to introduce a new design that essentially marks you out as cheap, yet still gives the important functionality, i.e. complete compatibility with existing Apps, so that a 2-tier (or 3, if you count the iPad) App Store is avoided. Though it probably won't be marketed as such!


February 18, 2011, 8:37 pm


I would not swap my £100 ZTE Blade for your Iphone, so I think that point of view is flawed it has nothing to do with cost. Think Itunes, crap call quality and apps that do the same thing.


February 18, 2011, 8:39 pm

@Matt "People buy Apple products, despite the high cost, because they want the best. The only reason to buy Android phones is to save money. Who wouldn't swap even a decent Android phone like a Nexus S for an iPhone 4 in a heartbeat, if offered a straight swap?"

Urm, me? I must clearly be a total freak by choosing a HTC Desire because i wanted one rather than an iPhone.


February 18, 2011, 8:54 pm

See this makes sense to me. Right now Apple has the iPhone 4 at the high end and the 3GS at the... well, not low end obviously, perhaps 'slightly less high end' is more accurate? So why not do this:

June / July the iPhone 5 launches with whatever refinements Apple decide to bestow on the masses. That's the new high end device and will more than likely be ridiculously popular. The iPhone 4 then shifts down (and maybe sells to carriers a wee bit cheaper than it does now) to become the mid-range offering. The 3GS gets a slight repackage, maybe a tweak or two to the guts to take advantage of new tech since it launched two years ago and pushed out as their 'low end' phone. It looks low end compared to the others as it's plastic, has the low res screen, less memory, slower processor (although if the A4 is cheap enough that would be a good upgrade to keep both devs and users happy in the long run) etc and is realtively unlikely to steal sales from higher up the range. Offer it only to the carriers at a reasonable price and Apple have got a relatively full model range without that much effort.


February 18, 2011, 9:32 pm


I think it will work. In mobile phones people don't just make do, it's more like something you wear. A device is not only the combination of it's BOM, but how good it looks etc.

I'm sure there's space for both in Apple's range, like they do with the white plastic Macbook and shiny machined aluminium Macbook Pro.

Apple is very good at positioning their products in both features and looks, I'm sure they still make their high end model "magical" and very desirable and a lower end more into the "just nice" territory.


February 18, 2011, 9:34 pm

@Matt - "Who wouldn't swap even a decent Android phone like a Nexus S for an iPhone 4 in a heartbeat, if offered a straight swap?". I'm with @Simon on this, I wouldn't. I don't want to be tied in to Apple's whole ecosystem and let them dictate to me what I can and can't have. That's why I have an N900 - that I can do pretty well whatever I want to with, including flashing different OS on it (I've played with both Nitdroid and Meego so far).


February 18, 2011, 9:35 pm


The vast majority of Apple's products are aimed at the tech illiterate who wouldn't have a clue whether or not what they're are buying really is "the best". I'd even wager that when it comes to the iPhone and iPad most don't even know what the alternatives are. Therefore to say they want the best is a stretch, Apple is the default choice.

Among my mates most of the geeks have Android phones and all of the non geeks have iPhones. Everyone's got what's "best" for them.


February 18, 2011, 9:45 pm


I suppose it depends on whether you want a slick smartphone, or a toy for installing different flavours of Linux on.


February 18, 2011, 9:54 pm

@Matt - What a ridiculous statement. I have a Nexus S and as I wouldn't swap it for an iPhone in a million years. Or my old Desire either for that matter.

Still doesn't change my point though, even if people are willing to swap their granny for an iphone, would they be willing to do this if everyone knew it was a budget iphone?


February 18, 2011, 10:07 pm

@Matt as many people have already pointed out to you, there's lots of people who wouldn't swap their Android phones for an iPhone; and I'm another. I wouldn't even swap if you offered me a cash incentive (well unless it was over £300). It's people like you who think Apple are the best without even investigating the competition and failing to see all the limitations of Apple that Apple must love; they know you'll blindly buy whatever they bring out. Now I'm not bashing the iPhone, I think it's great - I got one for my girlfriend, but you have to be able to see it's pluses and minuses and you obviously fail at that.

As for this latest rumour, it makes a bit more sense to me than a mini iPhone. True they cannot make it look "cheap" and weaken the brand, but I think they can do it skillfully enough (iPhone vs iPhone Pro) to make people feel smug for having an iPhone and not cheap for not getting the iPhone Pro (I made up the name). So maybe the next one will have same specs as current iPhone4 and the Pro will have better CPU, better camera and more memory (probably cap the cheaper iPhone at 8gb as well).


February 18, 2011, 11:17 pm

"aimed at a sector of the market Apple has previously not targeted"

Have they finally decided to make a decent phone that works as a phone??!!

Have they employed programmers who can actually write decent code??!!

Oooohh - the suspense is killing me!!


February 18, 2011, 11:27 pm

@Matt, you sir are the classic example of a 'fanboy'. I wouldn't swap my Desire for a dozen iphones... well actually I would but then I'd flog them and buy my Desire back! I am not a Desire or Android 'fanboy' as I can see both the positives and negatives of both the iphone and android phones. For me I could not live with an iphone having to rely on itunes and having to do things 'Apple's way'. I love the fact I can transfer video files straight onto my phone without having to convert them. That I can have a full browser experience and not be stuck as soon as I go to a site that relies on flash. That I can actually set things up to work the way I want them to and not how Apple decrees I should. Oh yeah, and that I can change my message alert tone! ;)


February 18, 2011, 11:47 pm

they could completely remove the flash,cut the resolution in half,build it with lesser quality components then slap on a sloppy browser and call it the apple desire.


February 19, 2011, 12:01 am

something free on a £20 a month contract and i think then they will have all bases covered.


February 19, 2011, 12:03 am

Apologies for the trolling, but it certainly got a response. It is funny how people fall into camps though. Many Android owners here talk about the freedom from having to do things Apple's way, or the agony of using iTunes, but isn't that clutching at straws a bit? Is part of the appeal of Android phones that they are not iPhones? I.e. if you take pride in your IT expertise, the relatively uncustomisable iPhone doesn't give much opportunity to show off, and the fact that every man and his dog seems to have one doesn't give much tech kudos either.

I concede that at the end of the day, both platforms can do most things well, and the differences will likely become increasingly slim. I don't own a smartphone (though have a Touch), but would personally prefer the iPhone for the choice of games, tight Mac integration and quality design. I have done more than my fair share of hacking over the years, with PC's, consoles and so on, and these days would rather spend a bit more money to get something that works well out of the box. You tend to get the extra back anyway when you eBay it, as Apple stuff holds it's value well. An advantage of having clearly identifiable models.


I can't see myself watching a film on any phone, though XBMC for iPhone and AirVideo (network streaming) give universal format support these days. Browser Flash support would be good though!


February 19, 2011, 1:02 am

I've been given an iphone 4 by work now and chopped in my blackberry. It's nicer to use but the battery makes it completely unusable with my usual call/text load as it dies in less than a working day. I've had to get one of those ugly battery bricks which makes it a bit unwieldy.

So I think a less featured iphone might be a winner for me and business in general because I imagine less features mean more battery life and the cost save on the handset would probably tempt more companies.


February 19, 2011, 3:18 am

@Matt Old Nokia N series phones still hold up very, as good as iPhone in shops these days. Desire is 18 months old roughly and is still difficult to find one under £200, it's HTC and Androids most recognisable phone, I see it about quite a bit, so not a silent minority as you'd think.

I have the Hero and have had problems with it, but I thinmk its fine for whats it does. I won't swap it for a re-packaged 3GS or cheaper iPhone 4 if that comes out tbh, even tho I'm used to Android for a while now, I tend to like and use any gadget I can get hold off.

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