Apple is, according to Bloomberg, working on an iPhone that’s one-third smaller than th current model (one half, according to WSJ) that will sell without contract for $200 (or presumably with ridiculous incentives, such as buy one get one free, with a contract). The question is, if this is true, how does it not create fragmentation in iOS land?

The answer is pretty simple. It could be an iPod Touch with a microphone and a cell phone radio. In other words, an iPod Touch that can make phone calls and use WiFi but which does not have a 3G modem. For bonus points it could easily be thinner than an iPhone 4 and smaller without sacrificing screen size (which is how to avoid fragmentation).

Of course Apple could just sell a tiny 3GS (or even a tiny iPhone 4). Especially if the iPhone 5 has some kind of ridiculously compelling advantage over the iPhone 4/3GS (remember that most iPhone 4 users will not upgrade this year) — e.g. twice the CPU and GPU and RAM, all of which is totally plausible.

Post Script: if Apple starts selling unsubsidized $200 iPhones comparable to a 3GS or 4, they can turn the US cell phone market (where almost everyone upgrades every two years and is locked to carriers) into the European market (where everyone upgrades constantly and few are locked to vendors). Assuming they can maintain decent margins, this could be a huge play and get Apple where it always wants to be — selling great products to end users.

P.P.S: the NY Times has debunked these rumors. (But if Apple is planning on releasing said phones just before Christmas then the NY Times could be right without the WSJ and others being entirely wrong.)


My first, second, third, and I think fourth cell phones were Nokias. The first was a behemoth that barely fit in a jacket pocket, could last for maybe six hours on standby but drastically less if you actually made calls with it, and had no features beyond storing contacts (and making phone calls) and potentially allowing a 4800 bps modem to be attached (a factor in choosing it which I never took advantage of). I remember envying my friends’ Ericssons for their minuscule size and superior audio quality, but deciding I had the better deal after trying to make sense of their menus.

It’s a testament to how good Nokia’s original menu system was that it survived so many years and generations of phones essentially unchanged without Nokia going out of business, but you can only sleep at the wheel for so long. (And we don’t know how long yet — a year from now Nokia will still have serious market share and may be shipping Android phones for all we know.)

My last cell phone was a Motorola RAZR*. Nice hardware (although its case was made of pieces whose color and finish didn’t match). It’s a testament to just how incompetent the cell phone handset industry that a product with such an awful menu system could dominate the market for two or three years. My RAZR offered “3G”, apps (written in Java), email, a web browser, and video. It only failed to be a “smart” phone because it lacked a qwerty keyboard. Oh, and all the features sucked. It was a decent phone though.

* The iPhone is, of course, not a phone but a pocket computer with a mediocre phone built in.

I think the NoWin alliance makes sense for Nokia if, and only if, it leaves Nokia free to switch to other options in a reasonable time frame and Nokia is exploring them right now. There’s no question that WP7 at least potentially offers a far superior end-user experience than Android. (Android phones and tablets still aren’t as fluid as lower-powered iOS devices — expecting Google to fix it Real Soon Now is as stupid as expecting Adobe to fix Acrobat. If they could have, they would have.)

In a sense, WP7s “failure” in the market thus far probably plays in favor of Nokia’s decision. If WP8 (say) rocks, it will help differentiate Nokia in ways Android never would or could have even if Nokia could somehow ship Android phones in a timely manner.

(And if getting the latest version of Android running on a new cell phone is so easy, how come the handset makers most invested in Android seem to have so much trouble doing it?)

I’m guessing Nokia had three obvious alternatives — MeeGo, Android, and WP7. (Their best alternative was buying Palm before HP got to it. Oops. Didn’t think we had a problem back then.) The question was, which will get us back in the game fastest with a good enough product? My guess is that Nokia hadn’t even really figured out how to get Android working on some of their existing handsets. (I wouldn’t be surprised if Apple has Android working on iPhone hardware and iOS working on Android hardware.) If Nokia could flip a switch and start shipping Android handsets in three months, say, they’d probably have gone that way.

I’m guessing the equation went like this — if we go Android we need to build or retrain a team to do the transition and in twelve months we’re a second tier Android vendor… Maybe. If everything works perfectly. If we go Microsoft… Oh wow MS just demoed WP7 working on five of our handsets, WTF? They said they’d do all the heavy lifting.

(As an aside, this is exactly how NeXT did an end-run around the stalled Apple-BeOS deal.)

In short, I’m guessing the reason Nokia went with Microsoft is that Microsoft basically offered to do the software part for them (that’s the “billions” Nokia gets from the deal). Nokia can retrain its existing software people or simply fire them, doesn’t matter, they’re not on the critical path. The key thing Microsoft offered that Android did not is Google’s classic failing and Microsoft’s classic strength — tech support.

Google offered a product, Microsoft offered a solution.