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Wednesday, October 06, 2010, 05:00 am PT (08:00 am ET)

Apple developing new iPhones with larger, smaller screens - report

Apple is currently working to expand the iPhone line, and may offer larger and smaller models as soon as early 2011, one Wall Street analyst has said.

Shaw Wu with Kaufman Bros. said Wednesday that checks with sources in Apple's overseas supply chain have indicated that the company is working on new iPhone models with both larger and smaller touchscreens. He said those products could launch in 2011, and on new carriers other than the currently exclusive AT&T.

"Our sources believe these likely represent new high-end and low-end iPhone models to complement its current iPhone 4," Wu wrote in a note to investors. "One possibility we are picking up is a "mini" or "nano" iPhone with a smaller candybar form factor leveraging technology in its new mini touchscreen iPod nano."

Though new handsets are typically released in the summer, the progress being made on these new models is far enough along that Apple could introduce new handsets as soon as the first half of 2011, and even as early as the first quarter of next year. Wu said he believes the new phones could become available on U.S. carriers other than AT&T, including Verizon, T-Mobile and/or Sprint.

"We believe Apple moving to a more complete iPhone product line makes strategic sense in that its iPhone 4 addresses only the high-end of the market," he said. "We think Apple should take a page out of its iPod playbook where it has had a lot (of) success with a 3-tier strategy addressing entry-level, mid-range and high-end, making it difficult for competitors."

It's the scalability of iOS, Wu said, that could allow Apple to make a "fuller iPhone product line," allowing it to offer even greater competition against Google Android.

However, the analyst also incorrectly suggested that the new iPod nano runs iOS. While the software on the small touchscreen device looks and acts much like iOS, Apple has said the device runs its own, new operating system.

Rumors of a supposed iPhone nano were quite common years ago, but have mostly died down since. Apple currently offers three iPhone models priced at $299, $199 and $99 in the U.S. with a two-year AT&T contract.