Apple may be developing cheaper iPhone

Apple Inc. is working on new versions of the iPhone that are aimed at slowing the advance of competing handsets based on Google Inc.'s Android software, according to people who have been briefed on the plans.
One version would be cheaper and smaller than the most recent iPhone, said a person who has seen a prototype and asked not to be identified because the plans haven't been made public. Apple also is developing technology that makes it easier to use the iPhone on multiple wireless networks, two people said.
Chief Executive Officer Steve Jobs, who remains involved in strategic decisions while on medical leave, wants to narrow the price gap that has made phones running Android more popular than iPhones. Google's share of the global smart-phone market more than tripled to nearly 33 percent in the fourth quarter, eclipsing Apple's 16 percent, according to Canalys.
Apple has considered selling the new iPhone for about $200, without obligating users to sign a two-year service contract, said the person who has seen it. Android phones are available at a range of prices at AT&T Inc., Verizon Wireless and other carriers, and typically are sold with agreements that include a fee for broken contracts. The iPhone 4, sold by AT&T and Verizon Wireless, costs $200 to $300 with a contract.
Natalie Kerris, a spokeswoman for Apple, declined to comment.
While Apple planned to unveil the device near midyear, the introduction may be delayed or scrapped, the person said. Few Apple employees know the details of the project, the person said. Apple often works on products that do not get released.
The prototype was about one-third smaller than the iPhone 4, said the person, who saw it last year.
Apple can sell it at a low price mainly because the smart phone will use a processor, display and other components similar to those used in the current model, rather than pricier, more advanced parts that will be in the next iPhone, the person said. Component prices typically drop over time.
Apple is also working on a dual-mode phone, two people said. This device would be able to work with the world's two main wireless standards - the global system for mobile communications, used by AT&T and overseas carriers including Vodafone Group PLC, and code division multiple access, used by Verizon Wireless. It is not known whether Apple will include this capability in the cheaper iPhone.
Apple is working on a technology called a Universal SIM, which would let iPhone users toggle between GSM networks without having to switch the SIM cards that associate a phone with a network, according to one person. This would help cut the cost of distributing and managing millions of SIM cards.
SUBSCRIBE TO BLOG BY: EMAIL
: ">FEED