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Now introducing iPod XLII!

This is nothing new for Apple. When the original iPod debuted in October of 2001, it was met with similar lust and apprehension over the price. Shortly after launch, $399 and $499 got you either 5GB or 10GB of space, and that was it. Many people, including plenty of folks in our readership, thought that the price was just insane for what was "just an MP3 player." Look where the old iPod is today: ubiquitous.

To get there with the iPhone, though, Apple will have to look to the iPod's history for inspiration. That history includes the sly use of different form factors and feature sets to build out the product line. Apple took a little over two years to go from the original iPod to sporting two different form factors, with the larger design based on the original and the iPod mini, which was introduced in January of 2004. The Shuffle showed up a year later in January 2005, with the iPod nano making an appearance nine months later.  All told, there have been four major approaches to the iPod in terms of form factor, excluding the iPhone.

It stands to reason that within a year's time, the iPhone will have another sibling. Apple needs something like the iPod Mini to bridge the price gap, and also the size gap. While it may have taken two years to cook up the iPod Mini, that was when the iPod was still new at Apple, and their business strategy was just taking shape. I firmly believe that Apple is already hard at work on iPhone successors. They'd have to in order to stay competitive.

What might future phones look like? The iPhone is very, very large... surprisingly large in a day and age when RAZRs and candybar phones are all the rage. It's not too large on the storage front, however. $599 for 8GB feels pretty steep. Both of these "features" are ripe for product differentiation.

Apple could do any number of things with the storage options, including rolling out 2GB and 4GB models (the Shuffle is still 1GB today, and there is a 2GB iPod nano). Then there's the screen. At 3.5" diagonally on a 3:2 ratio, it's very large. Not everyone wants a phone with a screen that large, and that can work to Apple's advantage.

Getting theoretical

Imagine an iPhone nano, a 2GB iPhone with 50% of the screen real-estate, thus roughly half the size of the existing iPhone. Small is hot in cell phones. By trimming down the storage and, more importantly, reducing the size of that gigantic screen by 33% or more, Apple could trim $200 off the price of this phone.

Would people want a smaller screen? Would such a screen cause problems for the user interface? These are good questions, but let's not forget that the Nintendo DS has a very bright, very clear and very sensitive 4.4 square-inch screen that has been on the market for half a year now, in a device that sells for $120. The iPhone's screen is currently approaching 5.7" in terms of square inches, from what we can gather. There's space to play with here, and don't forget: Apple does not have to replicate all features across the line. They could leave the super snazzy full-screen browsing, for instance, on the high-end product only. It becomes a selling point, a product differentiator. Here comes the case in point for just how far derivative products can fall from the tree...

Apple could do the Shuffle thing with the phone, and kick the screen almost off the phone entirely. Think that's madness? An iPhone with buttons? I point you no further than the iPod Shuffle, which has no screen, no vaunted UI, and plenty of sales. The iPod Shuffle is almost the antithesis of the top-of-the-line iPod, yet there it is. And both carry the iPod name.

All of this is speculation, but I also think that forthcoming cheaper models are something you can bank on. Apple's history with consumer electronics is one of product diversification. The company has truly excelled at breaking out various features across different price points, and all of those products have helped float the S.S. iPod. Why would the iPhone be any different?