iPhone nano to lack storage? Mockups start pouring in.

Some news has broke out stating that in order to make the iPhone nano possible, Apple will have to strip out its flash storage. It states:

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.

Good theory? Unfortunately, if this were true there would be no way to install apps from the App Store since they running natively and take advantage of the device hardware.

On the bright side, iPhone nano mockups have begun and you can check out here.