More Detail On Apple’s iPhone Nano

We have already learned that Apple is currently working on an iPhone Nano, which according to Sunday’s Wall Street Journal is real and may be headed to market this year.

But what cult of Mac has got will blow your mind. Here is the whole details:

Firstly, Apple has been working on a smaller, mass-market iPhone for a long time.

But to do that, Apple had to figure out a way to strip away some of the components to reduce both its size and cost.

Apple decided to lose some of the memory, which is by far the most expensive component of the iPhone (up to one-quarter of the device’s cost, according to iSuppli estimates).

By “some” of the memory, we mean ALL of the memory. The iPhone nano will have no memory for onboard storage of media, our source says. It will have only enough memory to buffer media streamed from the cloud.

“I’m talking strictly storage memory here,” said our source.

The iPhone nano will pull ALL it’s content from MobileMe. When users buy a movie or TV show on iTunes, it’s available to stream to their iPhone or iPad. The service is based on technology from LaLa.com, a streaming service that Apple bought last spring and then shut down.

“It would be a mostly cloud-based iOS,” said our source.

The WSJ report reported many of the same details, and also hinted that the new iPhone nano will have limited storage: “MobileMe… would serve as a “locker” for personal memorabilia such as photos, music and videos, eliminating the need for devices to carry a lot of memory,” the Journal said.

The prospect of a memory-less iPhone is intriguing, and our source has a great track record, however, it does raise a few questions.

The device cannot surely come without any memory — what about the operating system and critical system data?

And what about pictures and movies taken by the iPhone, assuming it has a camera? No onboard memory means photos and video will have to be streamed UP to the cloud, and presumably in real-time.

The device will also have to stream a bunch of other data in real-time — from email attachments to documents and spreadsheets in users’ Home folders. Such a system must have some local storage, or could each and every piece of data be streamed to the iPhone’s RAM, and quickly swapped in and out depending on the task at hand? And what happens when the iPhone is inevitably offline?

And no more loading up movies for long-haul flights, I guess. Better hope more airlines start offering free WiFi by the summer.