Is the Nano iPhone next?

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Reuters is reporting that Apple plans to launch a cheaper version of the iPhone in the fourth quarter that could be based on the ultra-slim iPod Nano music player, according to a JP Morgan report.

According the the Reuters report, Kevin Chang, a JP Morgan analyst based in Taiwan, cited people in the supply channel that he did not name and an application with the U.S Patent and Trademark office for his report dated July 8.

Apple filed a patent application document dated July 5 that refers to a multifunctional handheld device with a circular touch pad control, similar to the Nano’s scroll wheel.

“We believe that iPod Nano will be converted into a phone because it’s probably the only way for Apple to launch a lower end phone without severely cannibalizing iPod Nano,” said Chang noting that the new phone could have “rather limited functionality.”

Because of the anticipated lower price, 2008 sales of 30 million to 40 million units “is achievable,” according to Chang.

This would be a much larger volume than is expected of the first iPhone, Apple has targeted sales of 10 million units in 2008, which would give it a 1 percent share of the global market and present a much bigger threat to long-established phone makers such as Nokia and Motorola.

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