Edible Apple

Call it an iPhone Nano if you must, but Apple is reportedly working on a new and cheaper iPhone with a smaller form factor that it hopes will compete with many of the low-end Android devices out on the market. Citing a source who claims to have already seen a prototype, Bloomberg reports that Apple is toying with the idea of selling this rumored iPhone for $200 without a requisite 2-year service contract.

While Apple has aimed to unveil the device near mid-year, 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 don’t get released.

The prototype was about one-third smaller than the iPhone 4, and it had no “home” button, said the person, who saw it last year.

Apple would sell it at a low price mainly because the smartphone 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.

So let me get this straight. Apple is working on a top-secret iPhone that only few people within Apple are even aware of. Someone with knowledge of this project saw a prototype device sometime last year and notes that the entire initiative may ultimately be scrapped.

Convenient.

Okay, enough cynicism for now.

Bloomberg also relays that Apple is busy working on worldmode phones that would simultaneously provide users with both GSM and CDMA access, though it remains to be seen how the wireless carriers will cooperate and implement this into their billing schemes.

Apple is working on a technology called a universal SIM, which would let iPhone users pick from a variety of GSM networks without having to switch the so-called SIM cards that associate a phone with a network, according to one person. Having universal SIM capability built-in would help cut the cost of distributing and managing millions of SIM cards.

While a cheaper and smaller iPhone, on the surface, sounds like a grand idea, pardon me if it seems wholly unncecessary. You can currently find an iPhone 3GS for $49, and once the iPhone 5 is released, the iPhone 4 will inevitably drop down in price to much more affordable pricepoints. I suppose the only appeal of this somewhat smaller iPhone is that it’d come without a 2-year contract, but isn’t part of the iPhone experience browsing the web and consuming data?