Cult of Mac claims that Apple will make a smaller iPhone or an "iPhone Nano" that will cost only $200 without a contract. It will be smaller than an iPhone 4, but it will have almost no onboard memory. The phone will rely on cloud-based delivery. This will cost a lot less to make, as about 25% of the money used to create the iPhone 4 is for the memory. There obviously will be disadvantages. The phone will have no memory to store music, videos, or pictures. It will only have a tiny amount of memory, just enough to buffer media streamed from the cloud. According to many rumors, Apple will make a new MobileMe service, and use that for all media buffering. Apple cut the cost of the Apple TV in a very similar way. It is also possible that you will not be able to download apps on this device because that demands a good amount of memory. The Wall Street Journal says that the phone might offer voice navigation.
If you'd like my opinion on this, I think this is a very silly idea. First off, you would have to use an insane amount of data to listen to all your music and videos by buffering. The data plans for this phone would be ridiculously high, which cancels out the fact that the phone costs less. Second, you wouldn't be able to download apps! One of the main reasons why the iPhone sells so well is because it has by far the biggest app selection; over 250,000 apps! The platform with the second biggest operating system is Android, with only 100,000. So if you don't let this phone download apps, getting a cheap actual smartphone like the Samsung Intercept or the Palm Pre would be a far better choice.
