There are several problems with this hypothesis. Apple has said it before that they're getting more iPhone orders than they can manage to build in many cases. At $625 per iPhone and they're selling like hotcakes on top of their recent Verizon expansion, even if they could produce a lower cost iPhone, why would they? The profit margin doesn't make sense and isn't typical of Apple.<p>Of course I could be wrong and Apple may do an iPhone nano but this would also greatly diminish the user experience on the phone and apps experience by minimizing the screen. If you've ever played on an iPad, you'll know many apps work a lot better on the iPad. The screen size do make a difference. Shrinking the iPhone doesn't seem to be helpful in this area.<p>Lastly, Apple is not known for making half assed products with cheap components. Using older components doesn't equate to cutting costs low enough for profit margins on a retail $200 phone to make sense when they're raping $625 per phone as it is now. Would you do it? The economics just doesn't seem to make sense here.