Expanding the iPhone and iPad family

Could Apple be planning to expand and round out the iPhone and iPad families by adding higher and/or lower end devices that could appeal to additional segments of the market? While the rumors have been around for as long as the iPhone and iPad themselves, the latest incarnations -- a Retina Display iPad 3 in fall and a cheaper iPhone nano in summer -- make the concept worth looking at again.

iPhone and iPad (and iPod touch) are currently singular offerings. While you can pay extra for more storage, and sometimes last year's model lingers, there's really only one version of each product. Conversely you can get two physical sizes of iMac (though the design is the same), MacBooks, MacBooks Air in 11- and 13-inch, and MacBooks Pro in 13-, 15-, and 17-inch sizes the latter of which has additional ports. On the mobile side, while Apple originally only offered a single iPod they eventually expanded the line, introducing lower price versions like the iPod mini and iPod nano, and an extremely cheap version in the iPod shuffle.

So while Apple never chose to compete with the bargain basement, razor-thin profit margins of low end PCs they did suck all the air out of the MP3 market using massive economies of scale and brilliant supply chain management to keep healthy profits at the same time.

So the question is, will Apple do with the currently singular iPhone and iPad what they did with MacBooks and iPods? Will they offer higher end, pro-style iPads and cheaper nano-style iPhones?

For over 3 years the iPhone was only available on AT&T in the US. Eventually Apple probably figured they'd sold an iPhone to everyone who wanted AT&T or were willing to put up with AT&T just to have an iPhone. They needed a new market. This week they got one with the launch of the Verizon iPhone.

Now while Apple didn't let Verizon put an ugly logo sticker on the iPhone casing, load with bloatware, or lock down its features, they did make a major (for Apple) concession -- they put in a CDMA radio. CDMA is a dying technology. In Canada Bell and Telus have already switched to HSPA+ and in the US Verizon is busy switching to LTE. And if Apple is ruthless about anything it's ruthless about shedding dying technologies (floppy disks, optical disks, Firewire, Flash, etc.) For Apple to invest in designing, engineering, producing, and marketing a CDMA iPhone means they anticipate a huge return on that investment.

But at a certain point everyone who wants an iPhone on Verizon will have one as well. Sure the clich├ęd RAZR (aka feature phone) users will migrate towards smartphones but not all of them will want the iPhone's singular form factor and not all of them will want the currently still expensive data plans that go with it. Unless Apple addresses their needs, they'll go elsewhere the same way smartphone users who insist on a physical keyboard go elsewhere already.

Apple may not care about them any more than they care about losing bargain PC shoppers to the Acer and ASUS of the world, they may care enough to come up with nano and shuffle-esque solutions, or they may think differently enough to come up with something else entirely.

Likewise Apple may not care about the higher-end tablet market or they may decide they want to do with iPad what they did with MacBook and go pro.

The idea of an iPhone counterpart to the iPod shuffle -- a phone that hooks into iTunes but doesn't require data, just plays music and makes calls and is great to take jogging is interesting and would no doubt capture some of the massive if dwindling feature phone market. But would Apple ever want to field an iPhone that isn't tied into the App Store and the still growing smartphone market? I doubt it.

An iPhone nano -- even if it's just keeping the iPhone 3GS around another year like Georgia suggested on iPhone Live! last night -- is even more interesting. A "free" (subsidized down to $0) iPhone that can use all those App Store apps and has reached such scales that it's incredibly cheap to produce is almost compelling. Whether Apple would want to waste any margin actually making it HP Veer small is debatable but given Jobs' derision of smaller tablet form factors and the user hostility of shrunken UI it doesn't seem likely. Given iPhone 4 went Retina and iPhone 5 will again raise the spec bar, a 3.5-inch 480x320 iPhone could be nano enough.

iPad pro on the other hand is enticing. If Apple can nail the economics of 2x Retina Display on the same 9.7-inch screen it could be downright gorgeous. But what else would differentiate it? Many would love a 7-inch variant but that doesn't say "pro", does it? Others want a version that runs full on Mac OS X but even post-Lion the Mac UI just isn't made for touch. And an iOS that does more Android 3.0 Honeycomb desktop-style computing would have to be universal across all iPads or risk real fragmentation issues. Once an iPad, any iPad, goes Retina, it doesn't seem likely the non-Retina, older generation devices would stick around more than a year or two anyway.

So we're left with there being markets for extended iPhone and iPad families, price points and hardware variations that would appeal to wider user bases, just like the Verizon iPhone is doing right now. Each brings challenges along with it -- some that Apple traditionally wants no part of. But Apple is great at solving challenges in non-traditional ways. Apple will stick to one iPhone and one iPad until they need (not want) to make more. Then they'll expand in a way the rest of the industry doesn't expect -- just like when they brought an iPad to the netbook fight, and an 11-inch MacBook air to the pro portable space.