In a time when touchphones are becoming indistinguishable to the untrained eye, smartphone vendors have to get creative broaden their product portfolios. A small wave of down-sized smartphones has hit the market in the past year. Devices like HTC's HD mini and Sony Ericsson's duo of Xperia X10 Mini and Xperia X10 Mini Pro are now being followed by Samsung Galaxy Series Mini and a rumored iPhone Mini.
iPhone Mini (or Nano?) is speculated to be a cloud-centric mid-tier (wholesale ASP in the range of US$100-190) iOS-based smartphone, with a smaller screen size compared to the iPhone 4. Apple's potential product line extension toward the iPhone Nano makes sense as the third-ranked smartphone vendor globally (in terms of volumes for the full year 2010) looks to leverage its strong brand value to increase volumes, thus further expanding its growing iOS user base. And Apple?s products (iPods, iMacs, and MacBooks) all come in a range of sizes and prices.
The iPhone Nano is rumored to be a smartphone that will significantly leverage Apple?s cloud-based 'Mobile Me' online storage services platform. The capabilities of iPhone Nano in a ?thin-client?-like design could extend beyond personal content (mail, music and multimedia) storage to optimized web browsing, enhanced real-time chatting and access to web-based applications, taking Apple?s application and services ecosystem to the next level. At the same time, with an iPhone Nano, Apple could compromise on some of the hardware specs and salvage the gross margins from dipping too much while keeping pricing competitive.
The inclusion of iPhone Mini in Apple?s smartphone portfolio could have following implications:
- iPhone Nano could help Apple gain significant shelf share with operators using a differentiated offering relative to the sea of mid-tier Android smartphones.
- For operators, this also means selling a popular branded smartphone with lower subsidies (without a big hole in the pocket).
- The development could not only be an attractive proposition for Apple for generating revenue from a cloud-oriented model but also for the carriers in achieving higher ARPU.
- A more affordable iPhone could boost overall handset volumes for Apple as it will be able to target the huge base of feature phone users who are eager to upgrade to smartphone with a much easier opportunity to get their hands on a desired Apple product.
- This also presents a good opportunity for Apple to generate volumes in the high-volume but price-conscious emerging markets.
However, moving downstream into the hundreds of millions of units markets could create number of challenges in manufacturing, logistics, sales and marketing expenditure and customer support. The question is, does Apple have the scalable infrastructure; retail and service reach (like that of Nokia or Samsung) to enter and serve this potentially huge addressable market? Additionally, Apple would also like to tread carefully, as we have already seen promising cloud-centric handsets in form of Microsoft Kin One and Two doomed by poor marketing messages and pricing plans.
In summary, the new rumored Apple offering broadly intersects the lucrative mid-tier smartphone and potential cloud phone categories, which present ample opportunities for growth but also brings along new set of challenges that no handset vendor can ignore.