Over the years, Apple has been urged time and time again by customers and media analysts to build cheaper gear. When they respond at all, the answer is usually the same. Apple won’t build junk, and they cannot find a way to cheapen Macs, for example, without sacrificing quality and features. At the same time, Apple is regularly labeled as a luxury electronics maker, choosing only to play in the high-end and high-profit sectors.

That doesn’t mean less-expensive Apple products aren’t being made. Just weeks after Apple executives, during the quarterly conference call with financial analysts in late 2004, pooh-poohed the idea of a low-cost personal computer, the Mac mini was introduced. Then it was $499; now it’s $699 in a new form factor offering probably just as much bang for the buck. As cheap PCs go, it’s not cheap, but certainly affordable for people who might just want a second computer, or simply can’t afford to pay more for their primary PC. It also leverages most existing input devices and displays, so you don’t have to pay for replacements.

At the same time, Apple owns a lion’s share of the market for PCs above $1,000. The Mac’s overall market share is growing way ahead of most other industry players. Those who actually look to a personal computer as a long-term investment and actually do the math are apt to come to the conclusion that a Mac is actually cheaper to own. The initial purchase price is just part of what you’ll pay over a two or four year lifecycle.

On the iPod front, Apple went all the way. You can’t call a $49 iPod shuffle expensive by any means. Nor, for that matter, is the 64GB iPod touch, which retails for $399. When you compare both to completing products, you’ll see Apple plays fair and square, in large part because they buy billions and billions of dollars of parts in advance from the major vendors, and thus benefit from economies of scale. Having fewer models and design variations also means that parts can be shared. Consider how the A4 processor powers today’s iPad, iPhone 4, iPod touch, not to mention the Apple TV.

Moreover, few dare to suggest that we need a cheaper iPod.

As I wrote the other day, almost from the original introduction of the iPhone, Apple has been urged to build a cheaper model. Yes, at a subsidized price of $199 and $299, the iPhone 4 costs the same as other top-of-the-line smartphones. Yes, there are cheaper models, and those two-for-one sales, but from an end-user standpoint, the iPhone 4 is not expensive.

While the $49 iPhone 3GS represents a useful entry-point for iPhone purchasers, having a 2009 model in 2011 has to put off some customers who would rather buy a genuine 2011 product from someone else. I’m sure Apple realizes that, and with intense competition from the Android OS, RIM, HP (courtesy of its Palm subsidiary) and apparently the new Nokia/Microsoft alliance, surely they want to find a way to boost sales.

That brings us to the rumors of an iPhone nano, or whatever Apple might choose to call it. One set of speculation has it that Apple will simply shrink the existing iPhone form factor, and shave production costs as much as possible, to reach an unsubsidized price of $200 or $300. That, in effect, means a free phone for anyone signing a wireless carrier contract. Suddenly, customers will be able to choose a regular feature phone, a cheap smartphone from one of another of manufactures, or a genuine iPhone.

However, a tinier display threatens to seriously hurt the user experience. A 3.5-inch screen is already too small for some of you. My wife, for example, finds it awkward enough to have expressed a strong interest in the next iPad.

Another possibility is that the cheap iPhone might have more in common with the iPod shuffle. In other words, a tiny case, a minimalist or non-existent display, offering little more than telephony, a basic contact list, along with voice dialing and Bluetooth compatibility for hands-free devices. For people who already have an iPad, or are considering one, and don’t need a pocket-sized personal computer, it may be just the ticket. Today’s basic feature phones are difficult to use if your needs stretch much beyond making and receiving calls. A typically minimalist Apple interface on a tiny screen might be more than enough phone for tens of millions of people who buy regular handsets nowadays.

There’s no doubt Apple could build such a device inexpensively, and probably sell huge numbers, way above the figures tallied by today’s iPhone. It would stab all the other handset makers in the heart. Why accept a free LG, Nokia, Samsung or whatever, when you can get a genuine Apple iPhone without paying extra? You wouldn’t even need a data plan, because it isn’t a smartphone. Just the cheapest minute bundle you can find.

And imagine buying the iPhone “shuffle” from one of those prepaid cell companies, such as Boost Mobile or Cricket Wireless. Pay $30 and get an iPhone at no extra charge!

Skeptics might say, with justification, that an iPhone that doesn’t run apps is going to hurt the software market, but if sales go to people who won’t buy apps anyway, maybe it won’t matter.

But I don’t think any of you would dispute the likely possibility that Apple already has loads of different iPhone prototypes in their test labs. More to the point, regardless of the form factor, when stories about a shrunken iPhone appear in such publications as the Wall Street Journal, home of favored tech reviewer Walt Mossberg, it’s very likely the report was fed by Apple. Time will tell!

You may not know this, but there is a major mobile phone industry event in progress this week, the Mobile World Congress in Barcelona. That’s where the movers and shakers in that business are busy showing off their new products and services.

That is, except for one company who has managed to upstage yet another tech industry trade show that it didn’t attend.

In case you forgot, there was actually a Consumer Electronics Show in Las Vegas last month. Maybe you didn’t hear much about it, even though it featured demonstrations of new tablet computers, smartphones, 3D TVs and, of course, loads of accessories for the iPhone and iPad. That’s also the week when the Mac App Store debuted with the usual press release fanfare from Apple, but even that news was overshadowed by the announcement of a major media event the following week. That’s the one where the Verizon Wireless version of the iPhone debuted.

So while makers of mobile gear are currently strutting their stuff in Spain, there are rumors in the mainstream media that the iPhone is going to get a little brother (or sister) come this summer. The main sources appear to be a report at Bloomberg News and the Wall Street Journal that cite the usual informed sources about the forthcoming expansion to the iPhone lineup.

I’ll detail the speculation in a moment, but the most important element here is that this particular story has been around, in one form or another, almost since the original iPhone was demonstrated in 2007. The logic appears to make sense. Apple cemented its dominance of the digital media player market with the iPod nano, and added the iPod shuffle to move further down market. That made plenty of sense for music players, and being able to buy a genuine Apple gadget for as little as $49 made the iPod the most casual of purchases even for those who are strapped for cash.

Unfortunately, the cell phone industry is rather more complicated. Yes, you can buy most any handset you want, untethered to a carrier, for prices that rival that of some flat panel TV sets. The reason you can also get those same gadgets for next to nothing is the carrier subsidy. If you agree to accept a two-year service contract with the required minimum voice and data plans, hundreds of dollars are lopped off the purchase price. But don’t feel sorry for the carrier, because their monthly rates include that subsidy. In a way it’s similar to buying something with your credit card, and paying off the balance over a 24-month period.

So even though Apple’s revenue for every single iPhone sold is over $600, your price is $199 or $299 for the iPhone 4, depending on whether you want 16GB solid state storage, or 32GB. Apple and AT&T also offer the 8GB iPhone 3GS for a $49 subsidized price to capture customers who can’t afford the higher priced spread.

But rather than just sell last year’s model at a lower price until stocks are depleted, those rumors claim that Apple plans to build a tinier or “nano” version if the iPhone, sporting a smaller edge-to-edge screen and using other space-saving tricks to shave maybe a third from the size and weight of the original. The product will reportedly cost from $200-300 unsubsidized, which factors out to free with a standard wireless plan. Free would pit this iPhone nano, or whatever it’s called, against every other relatively cheap mobile handset on the market, even the basic feature phone. After all, why buy an entry-level LG, Nokia, Palm, Samsung, or Sony Ericsson handset when you can get a genuine iPhone for exactly the same subsidized price?

The existence of the iPhone has already upended the smartphone industry. Yes, Nokia sells more product, but most are the cheaper, lower-profit models, and that’s one key reason why the company has entered in a pact with Microsoft to switch to Windows Phone 7, eventually.

The theory goes that an iPhone nano will deliver industry dominance to Apple in the same fashion as the arrival of cheap iPods. Of course, the wireless phone industry is much more complicated, with strong competitors, most particularly the Google Android OS. But making it easier for people to own an iPhone must be a positive development, right?

I suppose, but the question is what Apple must sacrifice to build a slimmer, trimmer iPhone. I expect it will have less solid stage storage, probably 8GB. The screen will be tinier, but if kept in the same proportion as the one on the standard iPhone, it should be able to run the same apps without the need for updates, only in a tinier amount of space.

Now in the real world, the screen on today’s iPhone is mighty small in the scheme of things, and I’m sure many of you are busy zooming text and pictures to make them visible. We aren’t all teenagers with our eyesight reasonably capable of picking out tiny letters unless you’re visually challenged.

Certainly, any suggestion that Apple might build an iPhone with a bare-bones screen, similar to that of a standard cell phone, is out of the question. Yes, Apple could do wonders with the user interface, but most people who buy those handsets just want to make phone calls and keep a basic contact list for speed dialing. What’s more, Apple doesn’t build a product unless a difference can be made, with loads of profits earned.

Is an iPhone nano such a product? That remains to be seen, but the speculation, without doubt fueled by Apple’s marketing people, was sufficient to wipe much of the talk about the Mobile World Congress from the front pages of mainstream media. It’s an act of sheer brilliance!

So let’s see now. Nokia CEO Stephen Elop is the former head of Microsoft’s Business Division, a position he held until September of last year. In passing, he was also CEO of Macromedia before Adobe acquired the company. In a recent revealing memo, Elop admitted that Nokia’s mobile platform is collapsing around them.

True, Nokia is still the number one maker of mobile handsets, including smartphones, but many of their most successful products are low-end models, and, with Apple nipping at its heels, Nokia has suffered. Profits are declining despite rising sales because they are weighted in the wrong direction.

The arrival of the iPhone turned the mobile phone market upside down. Before Apple got into the game, such companies as Nokia, with its huge worldwide sales, Research in Motion, courtesy of the BlackBerry, and, of course the Windows Mobile platform, all did pretty well. The Android OS was just something Google acquired and were in the process of developing.

So consider Nokia’s status, as a fading giant in need of some help fast. So rather than develop their own mobile platform, the better to compete with the iPhone and Android, Elop went to his former bosses at Microsoft, another fading giant that could use a little help. Together, they struck up a deal that would involve the sharing of technologies, and , of course, moving to Windows Mobile 7 as the main OS for Nokia’s smartphones. Was this a match made in heaven?

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So Microsoft has released some maintenance updates to the Office 2011 for Mac suite over the past few months. They were largely designed to patch security holes, or fix some bugs. For the most part, I’ve seen no change in Word or Outlook, and the latter remains a tough sell, in severe need of real change.

As for Word, I agree with the reviewers that it’s petty snappy for such a bloated beast. For me, it often launches faster than Apple’s Pages, but that’s another story. On the other hand, when you open a Word document, it wants to be pinned to the left side of the screen, even though you take efforts to center in on the screen before quitting. Well, I’m sure it’s not because the ability to pin document windows to the corners of the screen is touted as a major feature of Windows 7. Maybe Microsoft’s Mac Business Unit doesn’t believe that people care about the inability to remember a document window’s position between launches.

But my real beef remains with Outlook 2011, the replacement for the bug-ridden Entourage. Outlook is supposedly written from the ground up in Apple’s Cocoa programming environment, although it seems to behave in many ways similar to Entourage. It’s almost as if Microsoft just ported the code over, without actually changing it. Well, in some ways.

The similarities might, of course, be designed to make the app seem as familiar as possible to the existing user base. That way, you can readily absorb the changes without complaining. Would that Microsoft did the same on the Windows side of the ledger. In any case, basic setups in Outlook are essentially the same as Entourage. Unfortunately, it’s also incredibly flaky.

Let me give you an example that became particularly irritating.

Now those of you who used Entourage recall its Achilles heel, which was the questionable decision to store all of your messages in a monolithic database. If that database got corrupted, you had to confront the ever-present danger of losing some or all of your messages. Of course, if your email service uses IMAP, as mine does, you can just dump the database, and wait for the messages to be downloaded all over again.

Outlook does have a database, but actual messages are stored as separate files. This is designed to make the app more efficient, more easily backed up in Time Machine, and to help protect you from the slings and arrows of damaged databases. But that doesn’t mean it can’t screw up your messages.

Some weeks back, Microsoft released yet another service pack for Outlook. I was otherwise occupied, but decided to give it another try the other day. To be sure, I was starting from scratch as much as possible, I deleted all relevant preference files (including those in the Identities folder found in the Microsoft folder).

That should have meant a relatively clean experience. The mistake I made, I suppose, was to import all of my accounts from Apple Mail. The actual messages would be downloaded from the relevant servers, including the one we use for our sites, AOL, MobileMe, and Gmail.

Welcome to the world of scrambled eggs.

While actually downloading messages, and I have over 50,000 stored in various accounts and folders, Outlook became predictably sluggish. Anything I’d do doing this process would convey the feeling of slogging through quicksand. So in that respect, Outlook isn’t all that much speedier than the last version of Entourage.

As before, Outlook’s curious spam filter would take a few dozen old messages and suddenly deposit them in the various Junk folders in my accounts. That action was no different from Entourage, which merely conveyed a further impression of familiarity (with a little contempt for the process).

The real problem occurred, however, when Outlook decided play a game of scrambled eggs and deposit messages in the wrong folders. Yes, I’m serious! No, it wasn’t a problem with my email server, which has worked perfectly on all my computing devices, using Apple Mail and other email clients. What this meant was that messages earmarked for a folder in one account would end up in the folder of another account. Yes, I’m serious, and, again, this isn’t something that could be traced to the email server, which was otherwise totally reliable.

When the email downloads were done, I quit Outlook. Unfortunately, the app’s corruption of email locations was apparently uploaded back to my email server, so I spent the next few hours in Mail attempting to sort things out.

Yes, I realize some of you might blame the server and not Outlook, but the timing was awfully coincidental. More to the point, returning to Mail produced no more problems, no more messages being deposited in the wrong places.

Outlook has an attractive interface, and the Mac variation of Microsoft’s infamous ribbon toolbar scheme actually looks quite decent. Other than struggling to cope with multiple activities on a late 2009 iMac with quad-core processor and lots of RAM, I could get used to it. But it still needs serious work, and, even if there’s another update soon, I don’t know that I want to confront the possibility of having to reorganize my email all over again.