Financial firm JPMorgan has given its clients conflicting forecasts this week about the iPhone's future, with teams in Taiwan and the U.S. squaring off over the likelihood that Apple Inc. will roll out a new, cheaper model based on the iPod nano this year.

On Monday, JPMorgan analysts Kevin Chang and Pei-Chen Wu, citing sources in the Asian supply channel and a recent Apple patent application, concluded that a US$300 iPhone based on the iPod nano would debut in the fourth quarter.

"Putting all the information together, we believe there's a strong sign that Apple will come out with a second phone that will replace iPod nano; or to put it another way, 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," said Chang and Wu in a note to clients.

Although several bloggers had used a July 5 patent application as the foundation for similar bets the week before, only the Chang and Wu note garnered extensive media coverage.

A day later, however, JPMorgan's New York analysts volleyed back, and essentially called their colleagues crackpots. In their own note to clients, analysts Bill Shope, Elizabeth Borbolla and Vlad Rom said it was "unlikely" and a "highly risky" move that Apple didn't need to take.

"The Asia team's call is distinct from our Apple view," said Shope, Borbolla and Rom.

Part of the disagreement was over timing. "A lower-end iPhone is inevitable, in our view, but we believe a near-term launch would be unusual and highly risky," the trio said.

They raised other objections, calling out Chang's and Wu's use of patent applications and the solid sales of iPod nanos in particular.

"As many Apple investors already know, Apple often publicly files patents that give little information on actual upcoming products," said the three U.S. analysts. "This is partly why Apple's products are so difficult to predict." And as for replacing the nano, that seemed "aggressive," even for Apple.

"We struggle to understand why Apple would abandon one of its most successful product lines with a carrier-centric low-end phone," said Shope's team.

Instead, Shope, Borbolla and Rom stuck to an earlier prediction that Apple's next iPhone move will be a 3G model no later than June 2008. "Our view is that the next iPhone will be 3G and remain a high-priced, non-subsidized model," they said. That prediction fits with one made yesterday by an Italian analyst, who said that when the iPhone debuts in Europe this fall, it will work on the same slower EDGE data network as in the U.S.

The two groups also didn't see eye to eye on whether Apple would agree to carrier subsidies and/or non-exclusive deals for any future iPhone. Change and Wu gave subsidies a "decent chance" and added that "we see no strong reason" why Apple would lock the new iPhone to a single carrier. "As the model is much simpler in terms of functionality, customization effort from operators could be rather limited," they explained.

Shope's team, however, also called that thinking misguided. "Apple broke long-standing industry practice by pushing for a service bounty in lieu of a carrier subsidy for the current iPhone," they said. "By doing so, the company gained unprecedented control over pricing. It seems odd that Apple would change this strategy so abruptly."

The current iPhone works only with AT&T's mobile network, and at US$499 and US$599, is one of the most expensive mobile phones on the market.

Chang, Wu, Shope and Rom did not respond to interview requests when asked to comment on the conflicting forecasts. metatag data