More Mini-iPhone Mania

Will Apple ever release a smaller form-factor iPhone? It will if its market-share aspirations for the device are anything like the ones it had for the iPod. In a research note today, Oppenheimer analyst Ittai Kidron says it’s only a matter of time before Apple releases a lower-tier version of the iPhone, extending its reach in emerging and prepaid markets.

If Apple intends the iPhone to grow beyond the top 20 to 30 percent of mobile subscribers, it needs to hit a lower price point and position the iPhone against competing devices in the mid and lower range of the market. One way to do that is to reduce the device’s bill of materials, something the company is said to be considering.

The other is to add another, smaller iPhone to its portfolio, which Kidron views as an inevitability. “We strongly believe that a lower cost mini-iPhone will eventually materialize, as it would allow Apple and carriers to ease back on the device and service pricing and extend Apple’s reach into new and lower consumer segments with only minimal cannibalization to the iPhone’s high-end position,” he writes. “Clearly, there is a large untapped market available to Apple once it lowers price, and it makes sense to approach these markets in the same way that the iPod found its way to lower price tiers.”

Kidron figures Apple could likely build an iPhone like this for about $93.11, if it were to make some design and performance compromises (cheaper screen, off-the-shelf processor, toss the front-facing camera). The question, though, is will it? Last time rumors of a mini-iPhone/iPhone Nano surfaced, people briefed on Apple’s plans dismissed them, saying the engineering and manufacturing challenges inherent in such a device were too great to make it worth pursuing.

Of course, as I’ve noted here before, there is another tack to be taken–an entirely new device.

What if the company’s strategy is to build an entirely new iPhone for the prepaid market? What if it were to build a feature phone version of the iPhone, one with a mass-produced chip, a lower resolution screen, less on-board storage and no app store, just a handful of built-in apps? That seems a hell of a lot easier than painstakingly removing features from the iPhone 4 or 3Gs to the point where it’s suitable for the prepaid market. And as many an analyst has pointed out a lower-tier iPhone-–one free of the required $70+ a month voice-and-data service plan–-could be quite the bonanza for Apple.

[Image credit: JackieTran, MacThemes]