Apple said to be working on “smaller, cheaper” iPhone

Apple is said to be developing a more budget-friendly, scaled down version of the iPhone in order to better compete with Android handsets, swirling rumors indicate.

Some guy supposedly saw a prototype for one of the smaller, cheaper iPhones, reporting that it was about 2/3 the size of standard iPhones and lacked the device’s Home button. Further rumors from the alleged leakers say the tiny iPhone would be available for about $200 without a contract, and that it would be made of the same parts iPhone 4s are built from, but could be priced lower due to eventual dropping costs for the technology.

Some reports say the smaller iPhone could debut as early as “mid-year,” but others caution that the budget iPhone could never see the light of day at all. According to an analyst that spoke to Bloomberg, the move is intended to gain an even bigger foothold in the mobile phone arena:

“Instead of targeting 25 percent of the global mobile-phone market, Apple would be going after 100 percent,” said Charlie Wolf, an analyst at Needham & Co. in New York, who has a “buy” rating on Apple shares.

If you’re a current iPhone user, could you give up some screen real estate for a lower price or easier to carry device? If you’re not an iPhone owner, could this cheaper, lighter iPhone tip you toward making the switch?