Apple would be wise to address the threat posed by low-cost entry level Android devices. If this is true I'd be more inclined to believe that Apple management isn't content to again be relegated to a profitable but small niche market.

The biggest cost in having an iPhone is the monthly plan. Fix that first.

True for all smartphones, was probably the biggest factor in the Kin's demise.

Buy an iPod Touch and use VOIP over WiFi for calling. You probably have WiFi coverage at home and at work.

What you are really paying for is the inbetween places. If those don't matter, then you are all set.

Is there a VOIP client that doesn't suck? I haven't had much luck finding one.

Wait, I thought AT&T selling last generation's (I think) iPhone for $50 with a contract was Apple's "response" to people requesting a cheaper version of the iPhone?

It was. This new device could very possibly be free with 2 year contract if it only costs $300-$350. The unlocked angle is mostly for the international markets where more carrier competition exists and there's a real incentive to go contract free. In the US, due to incompatible 3G frequencies on GSM phones and little real competition, there's not a huge market for these unlocked phones.

If this new iPhone 4-ish device was a CDMA/GSM hybrid with a healthy frequency selection it could shake things up in the US. At minimum you really need at least 2 fully functional carriers to choose from to bother with an unlocked phone. As a hybrid they could (in theory at least) support all 4 carriers on one device and push the US market closer to the international model where the consumer has an incentive to spend the money up front on hardware.

in India iphone 4 and iphone 3GS are available on shelf right now, 3GS has been priced such that it will affect nokia and samsung smartphone sales.

In Europe, they also sell the 3GS limited to 8GB storage. In its heyday, the 3GS was only sold in 16 and 32 GB versions. Note that all the software for the iPhone 4 (except for a few apps that require front-cam, flashlight or gyroscope) also runs on the 3GS. Seems to me the older 3G has been left behind for over an year now.

While I'm not saying that a cheaper "lite" iPhone version is not possible, anyone else feels that this could be a fabricated rumour by Apple to rat out internal leaks?

I once came across a (half-drunk) guy in a bar who apparently works for Apple and according to him, Apple does at times release fake rumours or have multiple versions of a product and monitors which one gets "leaked out".

Not sure how true his statement is but this rumour somehow doesn't feel right. Or maybe it is just me.

I would love an iPhone mini. Think the Pre form factor, with iOS.

Never. iOS is constrained by the size of fingertips and its current widget system. You can make a useful UI with a smaller screen, but reworking the current code base to that screen size will never happen.

Though an "iPhone Nano" in a watch form-factor like the TikTok's iPod Nano mod would be pretty cool:

http://www.kickstarter.com/projects/1104350651/tiktok-lunati...

Size of fingertips is not a constant. Apple could very well release a 3.2" 320v480 display.

If carriers could give away iPhones for free with a 2 year contract, iPhone sales would go through the roof.

Why do you think they can't? Deutsche Telekom in Germany will happily sell you an iPhone 4 (16GB) for 1€ with a two year contract (90€/month for the first half, 100€/month for the second half of the contract, unlimited minutes, 120 minutes in the EU, 3000 SMS, unlimited data throttled to GPRS speeds after 1GB). They are doing that whole activation fee scam and will want an additional 25€ from you but still, free iPhones are certainly a possibility and there is no reason to sell them for $200 together with a crazy expensive contract like, for example at&t does. I'm sure US carriers could sell free iPhones with contracts, they just don't want to.

Not that it matters anyway. Who cares about the price of the phone when the contract costs by far the most money?