In case you missed it, Apple recently entered the mobile phone market with the iPhone, an elegant device designed to converge and replace a mobile phone, iPod, and Internet-computing activities such as email and Web surfing, furnishing consumers with a gadget that can basically do anything you will ever need it to do. But how many people actually use all of that functionality? Did they over-shoot consumer needs with a feature-crammed, overpriced, slow-networked techno-bauble or did they create a new device category that fulfills needs that people didn't know they had?

The iPhone fits better in the more sophisticated smartphone market segment and by selling as many as 700,000 units in its first weekend is expected to sell 10 million units in 2008 which could amount to 5% of the market, far more than Apple CEO Steve Jobs stated goal of 1% market share. However, Apple also appears to be hatching plans to launch a cheaper version of the iPhone to compete in the lower-end and much larger handset market segment (dumbphone anyone?) in the fourth quarter that could be on the future of the ultra-slim iPod Nano form factor, according to a JP Morgan report.

A patent filed on July 5 describing a multifunction handheld device with a circular touch pad control, similar to the Nano's scroll wheel led Kevin Chang of JP Morgan to declare, "we believe that the 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." Because most Americans spend no more than $100 on an cell phone, Chang also believes that a lower-priced, Nano-based phone could sell up to 40 million units.(read more)