Now that The Wall Street Journal has added some weight and validity to the “iPhone mini” argument, we’re beginning to hear more about what such a device could cost to the consumer. This, coupled with previous Apple moves, has convinced me that we’ve already seen a prototype of the iPhone mini and it currently goes by the name iPod nano.

Here is my thinking …

Pricing

As Aldrin Calimlim first reported, Bloomberg has suggested that the iPhone mini will retail for between $99 and $149, and arrive late in 2013.

This price point, which is said to be part of the discussion Apple is currently having with U.S. wireless carriers, sounds about right. Naturally, the far more important question is what $99/$149 will actually buy the customer.

Apple’s iPhone strategy

Let us assume for the sake of this discussion that The Wall Street Journal and Bloomberg are correct in their reporting. In other words, the question now is no longer if Apple will release a less expensive iPhone, but rather when this will happen, and what the device will include.

In releasing a less expensive iPhone, Apple would have to also draw a distinct line between it and the company’s more traditional (and expensive) flagship model. This would mean that the iPhone mini would not only cost less, but also include less features.

I would expect, for example, that the more traditional iPhone 5S would include near field communication (NFC) capabilities, and also a stronger form factor. However, I would also hope that the smaller smartphone would come with a less robust version of iOS 7. Apple would also bring down the cost of the iPhone mini by making it less expensive to produce.

But I don’t think that this would mean the end of Apple’s strategy of keeping previous iPhone models around at lower prices. In other words, Apple’s 2013 lineup would still include the iPhone 5, and also a heavily discounted iPhone 4S.

The iPod touch won’t be affected by the iPhone mini

Whenever I try to explain the iPod touch to a would-be buyer, I suggest that Apple’s top of the line iPod is an iPhone without the monthly fees. After all, VoIP and a Wi-Fi connection makes an iPod touch a true communication device.

However, I would never suggest that someone buy the iPod touch solely to avoid monthly data and voice charges. Rather, the iPod touch’s biggest selling point is that it allows its owners to take full advantage of Apple’s iTunes ecosystem, including the App Store and iBookstore.

Besides, at its current $299/$399 selling price point, no one will mistake the iPod touch for a less expensive iPhone mini.

Apple’s head fake

Say Hello To The iPhone mini ??

Say Hello To The iPhone mini ??

The seventh-generation iPod nano, in my opinion, represents a total head fake on the part of Apple. Prior to this version, the iPod nano was square in design and the thinking went that eventually Apple would use it to make an iWatch. I believe that this will still happen, as recent rumors have suggested. As such, I’d expect the eighth-generation iPod nano to once again take on a square form factor.

I suggest to you that the current iPod nano is actually a test version of the upcoming iPhone mini. As such, it doesn’t contain iOS or the resources to communicate with the App Store. Instead, the iPod nano includes only an FM Radio and the ability for users to download songs when connected to a Mac or PC, plus other stripped down features.

Therefore, I expect that the iPhone mini will look very much like the current iPod nano, and include its many limitations. In other words, the iPhone mini will include no workable version of iOS 7, no App Store, and clearly be different than Apple’s flagship smartphone. This way, Apple will have a less expensive phone for the developer world (and for new phone buyers), while at the same time, not upsetting its target iPhone buyers.

Now it is your turn. Is my reasoning sound or not?