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Apple 'iPhone Nano' back in the game, says mole

Budget action against Android?

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Apple is preparing a $200 compact iPhone in a bid to beat Android at the budget smartphone game, it has been claimed.

It's possibly the 'mini iPhone' of rumours long past.

One source, who told Bloomberg he or she had been briefed by Apple on the matter, said the handset, which will be smaller than the current iPhone, will be sold without the need to take out a contract up front.

That claim strongly suggests that the budget iPhone will either be unlocked - Apple sells unlocked iPhones in most territories outside the US - or the company is planning to get into the virtual network operator business, something it has been rumoured in the past to be considering.

The precedent here is Amazon's Kindle 3G, which can connect to networks across the globe without the user having to do anything. Amazon bulk buys connectivity, picking whichever local network will cut it the best deal and swapping between them as necessary.

Amazon funds the cost of connectivity through its e-book sales. Apple could do likewise, paying for punters' calls through a cut from every app, e-book, song or video they and others download.

A second source also said Apple is looking at a universal network system which would allow owners to select which network they connect to without having to swap Sim cards.

There has been talk of Sim-less iPhones before, and it's possible to simulate Sims in software to allow the user to select a preferred carrier in whatever country they happen to be in, even if Apple doesn't think the time is right to begun bundling universal connectivity and cut operators out of the equation.

We think it's more likely to try that with the data-centric iPad than a voice-oriented product like the mini iPhone.

Which may not happen in any case, the mole said, suggesting this is a notion Apple's executives are pondering rather than a strategy they are actively pursuing. ®

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