Weighing in on the swirling iPhone nano rumors, The New York Times reported Thursday that a rumored smallish iPhone mode won't be small at all.

That's right: Those gorgeous iPhone nano artworks will remain just fan mockups.

Instead, the paper wrote, quoting unnamed sources involved with Apple's (Nasdaq: AAPL) development cycle, that the device will be similar in size to the current iPhone 4 because a smaller form factor would make the phone difficult to navigate and "would not necessarily be much cheaper to manufacture."

The report has debunked a previous Wall Street Journal story calling for a smaller iPhone. "The person said Apple was not planning to introduce a smaller iPhone any time soon," according to the Times.

The News Corp.-owned WSJ in its report asserted that Apple codenamed the iPhone nano the N97, but that moniker denotes the Verizon iPhone, NYT explains. Apple instead is thinking about making the new iPhone model, which is expected this summer, more affordable to broaden its appeal, and one way to achieve this is by reducing its storage. Internal components make up the bulk of the device's manufacturing costs, and flash storage amounts to about one-quarter of the iPhone 4's bill of materials. A lower-quality camera should also help discount its retail price, the report notes.

A richer and more advanced set of voice commands to control the handset are also in the cards, as well as a significant revamp of Apple's online services suite, dubbed MobileMe. Apple will make the latter free, rather than continue asking users to pony up 100 bucks for a year's worth of membership. The cloud service would act as a digital locker for users' photos, music, movies and other media, allowing them to synchronize content across iOS devices and bypass cables.

Apple will discount the iPhone 4 when a new model comes out, in the same way it now sells the iPhone 3GS for $49 with a two-year agreement, sources asserted. There's a point in not introducing a new form factor with a different screen resolution that would require developers to rewrite apps. Apple has so far successfully avoided platform fragmentation issues that complicate software development on Android. Should Apple come out with a cheaper iPhone, the company could enjoy a whopping sixfold increase of unit sales, a Sanford C. Bernstein & Company analyst told the paper.

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