Seems like the Photoshopped pictures of an iPhone nano might become a reality in the last quarter of this year, if a JP Morgan report turns out to be true. According to this report, Apple filed a patent for a handheld device eerily similar to the iPod nano, even sporting the same circular touch pad control.

To add credibility to his report, JP Morgan analyst Kevin Chang cited people from an unnamed supply channel as well as the smoking gun: an application with the U.S. Patent and Trademark office for his report.

Indeed, the launching of a more affordable version of the iPhone will bring both Apple and the consumers into a win-win situation. For Apple, such a move will boost iPhone sales, which initially expects only a meager 1% of the entire cell phone market shares. For the consumers (who usually spare about US$ 100 for getting mobile phones), a release of a budget iPhone will make owning one much more ideal.

Chang said in his report that should Apple go through with the possible iPhone remodeling, attaining sales as high as 30 million to 40 million will become an achievable goal in 2008. Also, with a lot of people turning up to get themselves a piece of the hot iPhone, getting - or even exceeding - that sales mark can be a very sure thing.

To view the U.S. patent application, you can click on the Read link.