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Cheaper iPhone in the offing?

According to a JP Morgan report, Apple Inc. plans to launch a cheaper version of the iPhone in the fourth quarter that could be based on the ultra-slim iPod Nano music player.

At 700,000 units in the very first week of launch, sales have been encouraging for iPhone. Still, owing to a high price tag of $500 and $600, iPhones are limited to a small percentage of the market.

If it wants a larger share of the market, Apple has to offer a cheaper iPhone and that exactly is what Apple’s reflecting on, according to a JP Morgan report. Kevin Chang, a JP Morgan analyst based in Taiwan, citing a patent application and people in the supply channel, says the cheaper version of the iPhone could be based on the ultra-slim iPod Nano music player. Chang says a way to follow up the iPhone with a cheaper version would be to convert the Nano into a phone with “rather limited functionality” and price it at $300 or lower.

Another analyst Gene Munster of Piper Jaffray expects Apple to bring out iPods that resemble iPhone, with features such as a touch-sensitive screen, later this year. Such products would help stop iPhone from eating into iPod sales.

Apple spokeswoman Natalie Kerris, however, declined to comment on what both said, making it sound like nothing more than mere speculation. It remains to be seen what the leading digital music player maker has up its sleeve.

[via reuters]