More on the iPhone nano rumors. I still think most people are missing the boat on this one.

> Phone users on tighter budgets have been shunning the pricey iPhones in favour of less expensive models which have Google’s popular Android software,” the report said. “Apple will now hope to lure away customers from the likes of Nokia. This quote makes no sense. For starters, until very recently, no Android phone was cheaper than Apple’s $100 3Gs. Especially once you factor in data costs, which are the same for all smart phones. And secondly, there’s no evidence to support the notion that anyone has “shunned” the iPhone. Its market is still growing.

Initial upfront cost is not the barrier to entry. Android was only successful last year because of cheap knockoffs in China and the Verizon situation in the US.

Android’s golden age is over. HP, Microsoft/Nokia and Apple will attack Android from all sides and stunt its growth this year. No one wants to relive the era of monopoly rule by a software dictator. Not even Microsoft.

“Apple will now hope to lure away customers from the likes of Nokia.” Now that part is true, I think, but not for the reasons this person thinks. Nokia will be focusing all of its efforts on Windows Phone 7, and Apple will flank it with a low-cost, “feature”-like phone and attack the other manufacturers in the last stronghold they still have.

Now, when I say Apple’s new iPhone sibling will be a “feature” phone or a “dumb” phone, keep in mind, I don’t think it’ll suck. It’ll be the nicest, coolest, sleekest feature phone the planet has ever seen. But it won’t be a cannibal to iPhone 5 sales. It has to have some differentiation from the standard iPhone if the two different models are to co-exist side by side. And like most Apple products, it will start off with minimal features, then evolve into a more capable device over time.

See my earlier post for why I think the new iPhone sibling model has to be something other than a small iPhone 5.