Apple working on smaller, cheaper iPhone

NEW YORK - After the unprecedented sales of its iPhone, Apple is working on a new line of cheaper iPhones which will half the size of the current iPhone 4, according to the Wall Street Journal.

The Journal reported Sunday that Apple was undertaking an overhaul of software services for the devices to accelerate sales of its smart phones amid growing competition.

iPhones sales accounted for 39 percent of Apple’s total revenue of $26.7 billion for the latest quarter. These sales are estimated to go up by 7 to13 million units in the US as Verizon Wireless became a new carrier for iPhone last week.

With 16.2 million units shipped during the fourth quarter of last year, the Apple smart phone came last on the Top-5 list, tech research company IDC reported last month.

Quoting people who have seen a prototype of the smart phone, the Wall Street Journal said the new iPhone - code-named N97 - would be about half the size of the iPhone 4 and available to carriers at about half the price of the current unit.

This would allow carriers to subsidize its retail price, putting the iPhone in the same mass-market price range as rival smart phones, the Journal said, quoting people who saw the prototype.

Though apple currently sells iPhones to carriers for $625 each, consumers willing to accept a two-year contract get it for $199 from carriers.

Interestingly, Apple is revamping its popular MobileMe online storage service which lets users store data in a central location and synchronize their calendars and contacts among computers and other devices, the report said.

Currently, MobileMe comes with an annual subscription fee of $99, but Apple may give it free to 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 quoting it sources.