Rumors of the Cheap iPhone Return

As usual, the rumors of a cheaper iPhone are back.

Based on a report in The China Times, Boy Genius Report claims that Apple is now working on an economic iPhone and to release it to contend with the cheapest of the Android smartphones. Apple will reportedly launch the low-end iPhone late within this year, probably around the same time as the sixth-gen iPhone. BGR also throws around the term “iPhone Nano”–a reference to earlier rumors of a smaller phone (as seen above) –but I don’t see any mention of that in any of the source material in China Times.

In the US, the iPhone 3GS is sold at no extra cost with a two-year contract through AT&T, although an unlocked iPhone 3GS will still cost you $375. In other countries, where carrier subsidies aren’t as prevalent, Apple may want to go cheaper to stay in the game.

I still doubt that Apple would tarnish its image and launch a new, less expensive iPhone instead of simply lowering the price on existing models. There’s not much room to trim the specs on the iPhone 3GS except for storage space, and I can’t see Apple going lower than the 8 GB standard low. Lowering screen resolution is absolutely impossible since it would jeopardize the way apps run, and cutting back the processor would risk the phone’s ability to impeccably run iOS 5.

Come this autumn and I wouldn’t be surprised to see the no-contract iPhone 3GS price hit $250 or even lower. At that point, the phone will be more than three years old, and would be seen as a bad buy for most consumers, even though it is still better than most low-end phones out there. For people who travel around a lot and want a low-cost smartphone with the ability to swap SIM cards for their overseas ones, a cheap, unlocked iPhone could be quite a bargain.