Reseach firm JP Morgan yesterday made headlines when a Taiwan analyst announced his prediction that Apple would unveil a smaller iPhone taking after the company's top-selling iPod nano, but the firm's U.S. headquarters has released a second report with lower expectations for the Cupertino-based company. Taiwan-based JP Morgan analyst Kevin Chang yesterday predicted that a $300 iPhone will ship before the end of 2007, but senior analyst Bill Shope from the firm's U.S. head office says that Chang's sources aren't corroborated and that his prediction would contradict Apple's historical approach of waiting until a new device becomes necessary for the market, according to AppleInsider.

"We believe a near-term launch would be unusual and highly risky," said Shope. "It took Apple over two years to launch its first low-end iPod (the iPod mini). Not all consumers want a combined phone and music player, so Apple is likely to keep the iPhone and iPod as distinct business segments for as long as this makes economic sense."

The analyst also issued a warning to investors about basing estimates on a single patent filing, reminding industry watchers that many of Apple's patents rarely make their way into shipping products.

Shope considers Apple's stock price volatile due to the extensive dependence on the iPhone's launch success, and is holding a neutral share rating until the air clears on whether the iPhone is helping or harming Apple's bottom line.