The buzz is getting louder among consumers, analysts and competitors over when -- and if -- Apple (Nasdaq: AAPL) 
intends to leverage its iPod empire with the manufacture of an iPhone.
Now, reports from a Chinese newspaper seem to validate the speculation. Among the few remaining questions are what the iPhone will look like, and what features and functions it will boast.
Apple has awarded a contract to manufacture about 12 million units of iPhones to Taiwan-based Hon Hai Precision, also known as Foxconn, according to several reports. Hon Hai, the world's largest manufacturer of information technology devices, also manufactures the iPod.
Keeping Mum
Apple has yet to confirm the reports, and there are no further details about the new device -- but there is no lack of speculation about how an iPhone might integrate with the Apple family of products.There appears to be general consensus that an iPhone would function as a mobile phone and a digital music player for what might serve as a two-in-one device.
It seems unlikely that an iPhone, which could emerge during the first half of 2007, would have smartphone features. An entry-level phone would leave room for Apple to introduce a professional model, as it has done with its MacBook notebooks.
Neither Apple nor Hon Hai were immediately available for comment, but Apple execs have hinted at the possibility of an iPhone in the past.
Straying From Motorola
This is not Apple's first attempt at a mobile phone. Apple partnered with Motorola (NYSE: MOT) to launch the Rokr line last year. It was the first iTunes phone on the market, but the iPod-maker did not have much say over the product's design, according to Tim Deal, senior analyst at Pike & Fischer.
"If there is validity to the iPhone [rumors], we'll see something that Apple has had a lot of input into. We are going to see something that is sleek and innovative, and reflects Apple's skill in design aesthetics," Deal told MacNewsWorld.
Apple has a track record of maintaining a degree of uniformity in the design of its products to bolster the brand. Apple's designs are clearly differentiated in the computer and digital music player markets. However, Deal said, Apple is adept at surprising the world.
Maintaining a Competitive Edge
"The iPod would be an entirely new form factor for the company. We'd certainly see hints that tie into the rest of Apple's product family, but it would be something that raises some eyebrows," Deal said.
Deal called the iPhone an evolution of the iPod, which is itself constantly evolving. One component that is missing from the iPod is wireless connectivity. An iPhone would fill that void in Apple's line up.
Strategically, Apple seems to have little choice but to incorporate a wireless component in its product lineup, with Microsoft (Nasdaq: MSFT) nipping at its heals with the Zune, and Verizon pushing its V-cast service and Chocolate phone.
"There's definitely a need for Apple to maintain its competitive edge in this space by offering a wireless product that will capitalize on next-generation broadband wireless capabilities," Deal said. "It makes sense for the product road map."
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