This would be one hell of a news if it turns out to be true. According to Bloomberg, Apple is working on a smaller and cheaper model of the iPhone to compete with the ever expanding Android platform.

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Bloomberg says that the new smaller iPhone would be 1/3rd of the size of the current iPhone, will sell for a price of just $200 and that too without any contract. This might sound a bit crazy since this could somewhat fragment the iPhone itself. TheNextWeb on the other hand picked out all the rumors from the report apart from the cheaper iPhone, they are as follows:

Rumor #1: Apple is creating “dual-mode” technology so it will be easier to use the iPhone on both GSM and CDMA networks. However it is not likely that this capability will also come in the smaller, cheaper version.

Rumor #2: Apple’s Universal SIM tech is in the works, which would let iPhone users toggle between GSM networks without having to switch the so-called SIM cards that associate a phone with a network.

Rumor #3: Apple is working on redesigned iPhone software that would let customers choose a network and configure their device on their own, without relying on a store clerk or representative of a carrier, according to the person.

If this rumor does turn out true, then we will see the new iPhone this year. I wonder why Nostradamus didn’t predict this one? [via TNW] [source Bloomberg]

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