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Prudential: iPhone to sport click wheel; video iPod by Q2

Apple Computer's much anticipated iPod cell phone will look like an iPod with a small screen and a click-wheel interface, according to one Wall Street analyst.

In an extensive research note released to clients earlier this week, Prudential analyst Jesse Tortora said the first and slimmer of Apple's initial two cell phone models will look like an iPod with a small screen and a click wheel interface.

"Apple has mentioned several times that music experience is its top priority and that it would not do anything to compromise that," the analyst wrote. "We believe that the music phone will be true to these statements and should be considered a music player that has phone capabilities rather than a phone with a built-in music player."

Tortora said the iPhone device, which he calls a "slim music phone," will pack camera functionality and be GSM/GPRS network compatible. Meanwhile, he said Apple is also working on a smart phone device with a larger OLED-based display and a sliding keyboard that will be WCDMA compatible to allow for higher bandwidth.

"The smart phone will contain camera functionality along with additional features that the slim phone does not have such as wi-fi and video capabilities," he told clients. He added that those additional features put pressure on battery life, which Apple is still working to address.

"Since the phones will be GSM/GPRS and WCDMA compatible, the choice of carriers will be limited to
Cingular and T-Mobile," he wrote. "While there has been some speculation that Apple may take the MVNO (Mobile Virtual Network Operator) route, we don’t believe it is a serious option for Apple as the risks outweigh the advantages."

According to the analyst's checks, manufacturing ramp has already begun for the slim phone, which is likely to be available for sale late in the first quarter of 2007 or early in the second quarter. He expects the smart phone to be released about 1 to 2 quarters thereafter.

Tortora also told clients he expects volume production of a widescreen iPod to begin in the first quarter of 2007 with availability shortly thereafter. "This device will have a larger screen than the current version, specifically designed for viewing downloaded movies and video clips," he wrote.

The analyst's description of the slim music phone — largely dubbed "iPhone" by analysts and industry insiders — appears to be similar to an artist's rendition recently published over at MacRumors.