Is This the iPhone Nano?

Unconfirmed reports have been circulating lately that Apple is developing the iPhone Nano -- a smaller, cheaper version of its smartphone. The latest rumor includes what is supposedly an image of this device.

The picture -- which was sent to MacRumors -- fits with the earlier reports, as is shows a device very similar to the iPhone 3G, but about a third smaller.

According to earlier reports, the iPhone Nano will be the same height as the recently-released iPod Nano, but wider and thicker.

This same source says the iPhone Nano will have much in common with the current version, but lack 3G wireless networking.

Many details haven't even been rumored yet, though, such as the amount of built-in storage.

Is It Real?

Whether this device exists anywhere outside of the hopes of some Apple fans is open to debate. The closest thing to solid evidence that has emerged is a listing on a third-party accessory-maker's website.

With the economy going sour, a less expensive version of the iPhone might do well, but some have questioned whether this makes sense, either financially or technologically.

A cheaper model would reduce sales of the iPhone 3G -- cutting into the hefty profits Apple is making from this device -- unless the iPhone Nano's feature set has been considerably stripped down, but this will also reduce demand for the new version. Finding a "sweet spot" between features and price could be a challenge.

Also, there isn't much spare room in the iPhone 3G's design. It might not be possible to cut it down in size by a third and still have viable product.

Coming When?

None of the rumors so far have included a definite launch date for the iPhone Nano, aside from speculation centered on the two major tradeshows scheduled for January: MacWorld and CES.

However, Apple has signaled recently that it plans to announce its products at private events on its own schedule.

AT&T has an exclusive multi-year contract to offer the iPhone and related products, so if the iPhone Nano is real there's no doubt which carrier will offer it in the U.S.