Rumor: Apple Producing Smaller iPhone Handset

Is Apple working on an iPhone Nano? Maybe! The rumor has definitely been around before, but this time it's picking up an unusual amount of steam. Bloomberg's sources found this week that Apple may be developing a smaller, less expensive version of the iPhone, with a prototype device already kicking around somewhere in Apple's labs. The only issue with the report is that there's no indication of exactly how small "small" will be.

What's really crazy is just how much sense a move like this suddenly makes. Just this week, HP introduced their smallest webOS device ever, indicating that there's some demand for a smaller phone like that. With Apple already producing an iOS-like interface on the iPod nano, it wouldn't take too much effort to port that over to a smaller iPhone. Reportedly, Apple would sell the phone for $200 without a 2-year agreement.

In America, we're used to hearing about cellphone prices in terms of 2-year contracts. For example, a non-contract iPhone 4 would cost well over $600, so a 3x decrease in price would be monumental. These rumors definitely aren't confirmed yet, but it's hard to believe someone would fabricate something this elaborate. Not to mention that it makes sense; HP already has done something like this, so Apple might not be too far behind.

It's hard to say how limited a small iPhone would be. Would the iOS experience suffer? Only time will tell...if it ever happens, that is.