Reports from newswire service Reuters have the blogosphere salivating over the possibility that Apple will release a smaller and cheaper iPhone similar in design to Apple's Nano digital music player.

(This image that imagines an iPhone Nano and Shuffle is from eCanadaNow which posted a story about the iPhone Nano.)
Kevin Chang, an analyst at JP Morgan in Taiwan, told Reuters, "We believe that iPod Nano will be converted into a phone because it's probably the only way for Apple to launch a lower end phone without severely cannibalizing iPod Nano," Chang told Reuters.
Reuters reports Apple filed a patent application on July 5 that seemed to suggest that the company was intending to introduce a Nano-style iPhone with a "circular touch pad control" much like the Nano.
Conjecture among professional speculators who are fueling the iPhone Nano rumors say look for this device to be under $300 and available in time for the holiday shopping season.
Not to miss an opportunity to blab, another analyst contributed to the iPhone rumor mill telling Reuters Apple will likely bring out iPods that resemble the iPhone's touch-sensitive screen later this year. The analyst, Gene Munster of Piper Jaffray, explains to Reuters: "Such products would help stop iPhone eating into iPod sales."
Apple is not saying a word.
Not to waste on nanosecond, bloggers and social bookmarking sites like Digg have already stepped up the iPhone Nano watch.
Oh, please. Just filing a patent application does not indicate anything at all. It's just a motion for further intent.
Mark Rosenberg
Patent Consultant
http://www.Patentclaim.com, protectors of patent infringement