Why the iPhone Nano doesn’t make sense?

For a couple of weeks, there’s been a growing number of blog coverage about a rumored iPhone Nano which Apple is supposed to be working on. All we’ve seen though are knock-offs from China and eager iPhone Nano accessory makers.

An iPhone Nano does not make any sense for Apple and surely this rumor won’t fly to many who are still waiting for an affordable version of the iPhone 3G. Here’s why.

• Screen Real Estate. One of the best features of the iPhone is it’s screan real estate. At 3.5″ very few other phones has this much screen size (the only other phone I know is the HTC Touch HD). Bigger screens mean better viewing pleasure and more content you can squeeze on top of the fold. An iPhone Nano, with say a 2.75″ screen, will be too small for viewing comfort.
• Price Considerations. Shrinking the iPhone does not necessarily shrink its price so the argument that a Nano will be cheaper will not hold water. Besides, the price of the Apple iPhone is embedded in the monthly service fees paid to the telcos and not the upfront cost. If the iPhone 3G starts at $99 to $199 right now (with 24-month contract), an iPhone Nano at $49 with the same contract wont convince people that much.
• Reduced Features. Downgrading the iPhone 3G to the iPhone Nano might also include shedding off some of its key features — possibly the GPS and WiFi. A crippled and smaller iPhone 3G might not be enticing to consumers either.
• Apple wants to maximize profits and a cheaper iPhone Nano might not bring them the numbers to justify that. Again, the bulk of the cost is in the MSF and not the upfront cost (unless you’re in a country where law forbids exclusive lock-in offers).
• iPhone Apps. Behavior and functionalities of hundreds or even thousands of iPhone Apps might not work because oft he smaller scree. The virtual keyboard alone will also have to be shrunk. It will also be harder for developers to create two separate iPhone Apps for two devices.

The Apple iPhone is just 1 and a half years old only. The device is still too young for Apple to split into two form factors. For me the iPhone Elite just makes more sense.