The rumours of a smaller iPhone have surfaced again. This time, AppleInsider is reporting that extremely reputable sources have indicated that a second iPhone model is on its way before the end of the year. Conceived as a scaled back, lower cost alternative to today’s iPhone, the second iteration of the handset is presumed to marry iPod functionality with rudimentary cellular capabilities. It will not let you surf the web or do email though.
Development of this second iPhone is well underway and it was apparently undergoing final engineering review even as the original iPhone was just starting manufacture. The second iPhone is smaller and apparently sports a different user interface. A recent patent application by Apple for an interface similar to the current scroll wheel but incorporating multifunction (including phone) suggests what it could look like.
This smaller iPhone model would sell for something between the price of a nano and the current iPhone.