We're coming up on MacWorld awfully quick now (TiPb will be there, natch) and so the rumors are flying. Expectations have been decidedly lower than in years past due to the absence of his Steveness, but there's one persistent rumor that just won't go away: the iPhone Nano.

The universal response to these rumors has pretty much been "Meh." Engadget wants to know what the deal is. Macrumors thinks that it's just case makers riding Apple rumor coattails. Gizmodo doesn't believe either.

The rumor won't die, though, so: what if it were true? What would an iPhone Nano look like?

Our esteemed editor Rene has worried that an iPhone Nano seems like a non-starter because it would split the unified iPhone platform -- forcing developers to plan for multiple screen densities and feature sets. That has been a recipe for pain on other mobile platforms (though, to be fair, Windows Mobile manages fairly decently), so it seems unlikely that Apple would do that. Then again, given the way the App Store is going, if any mobile platform can handle fragmentation right now, it's Apple.

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The common wisdom is that Apple is no longer interested in feature-phones for obvious reasons: the MotoROKR debacle, the fact that all phones will become 'smartphones' in the near future, the fact that Apple's selling the $199 iPhone just fine, thank you very much. I'm inclined to agree with all of these arguments. But the rumors. won't. die. Plus, well, maybe, just maybe, Apple is blinking in the face of the tanking economy and thinking they need to actually release something inexpensive.

Let's start with the assumption that Apple will be good to their burgeoning iPhone/iPod Touch platform and not fragment it into multiple screen sizes and form factors. What then?

If you've been following the Apple news of the past few months, you may remember some of the Papermaster hiring saga, namely that he's replacing Tony Fadell, who wanted Apple to create a much less ambitious iPhone based on Linux.

Here's a thought experiment: imagine if Apple followed Fadell's original plan for a bit before abandoning it, developing the iPod Classic OS just enough to support basic phone functionality (or, alternately, stripping out most of the iPhone OS to make it a featurephone OS). If they had, then the plans for such a phone would be sitting on the shelf, waiting for Apple to notice the economy tanking and consumers wanting something less expensive. Fadell's basic iPod + Phone would sport a fully functional iPod Classic slapped onto a featurephone and frankly that would appeal to a lot of people. On the outside, it looks exactly like a classic iPod, on the inside, a simple phone.

There have been a few sets of people who have been resistant to the iPhone's charms. One of the larger groups: people who still adamantly love their RAZRS because they're small, sexy, and because they're flip phones. This group of people still believe that the iPhone is "Too much phone for me" and want something simpler -- even if it's only perceived as simpler. Give them a flip-phone with a real iPod on it and, well, they'd buy. Oh yes, they'd buy.

I'm still not sold that it's going to happen. Apple famously isn't interested in the low end -- until they are. The iPod Nano and iPod shuffle are huge sellers for Apple and their obvious quality helps the Apple brand. If they can pull the same thing off with a clamshell phone, it would be a Pearl Flip killer.

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