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1/2/2009
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iPhone Surprise Could Be In Store At Macworld

Reports of an iPhone Nano and 32-GB iPhone from Apple are keeping smartphone analysts on their toes as Macworld unfolds.

It was only two years ago at Macworld when Apple's CEO Steve Jobs pulled an iPhone from his pocket and said the company was entering the cell phone market. While the smartphone and its 3G successor aren't without their flaws, Apple has become a significant player in the field, and the company sold nearly 6.9 million iPhones last quarter.

But as a new Macworld unfolds this week, analysts and industry watchers are keeping a close eye on Apple's smartphone front. Much of the excitement and anticipation for this year's event was dampened when Apple abruptly announced this would be its last show, and that Jobs would not be delivering the keynote speech.

Since his return in 1997, Jobs has delivered the keynote address at every Macworld. Apple fans, the media, and shareholders have grown accustomed to Jobs introducing major products during these so-called "Stevenotes." Philip Schiller, Apple's senior VP of worldwide product marketing, will try and fill Jobs' shoes, but some Apple fans have already decided to give him a chilly reception.

It is unclear what, if anything, Schiller will announce regarding the company's cell phone plans, but the rumor mill is in full swing. At the top of the list is the idea that Apple will unveil a smaller, cheaper version of its touch-screen smartphone, or an iPhone Nano. This rumor has been going around for more than a year, but it received extra credence over the last few weeks as a couple manufacturers began selling "iPhone Nano" cases.

While the iPhone 3G has been a sales hit, a smaller iPhone could allow Apple to get to the coveted $99 price point, which may be especially appealing to consumers during a global economic slowdown. An iPhone Nano would probably lack 3G and GPS, which could potentially bring down the customer's monthly data service bill. Apple could go another route and introduce a 32-GB iPhone, which would double the capacity of the top model. The company already offers a 32-GB iPod Touch, and memory continues to fall in price.

As an added benefit, the launch of a major product by someone other than Jobs could help break the perception that the company, and its stock price, is inexorably linked to its visionary leader.

But some analysts and industry experts remain skeptical that the company will show off new iPhones next week. Noted Apple watcher Gene Munster, from Piper Jaffray, said he does expect Apple to expand the iPhone line with a cheaper model, but he doesn't expect it until later in the year.

"While we believe it is unlikely that a new iPhone will be released at Macworld, we continue to expect a new model by the end of the March quarter," Munster wrote in a note to investors. "Specifically, we believe Apple could introduce a lower-end model that is slightly thicker due to the inclusion of a slider keyboard for students (texting) and business use (e-mail) between $99 and $149."

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