Apple is working on a tiny iPhone that would be about half the size of the current model and cost half as much, the Wall Street Journal reports. The new phones will come out this summer, says the report.
A Bloomberg report earlier this week suggested that the new phones may cost as little as $200 without a wireless contract.
The Journal also says that Apple may open up its MobileMe service, which automatically backs up information like contacts, photos, and videos, to a Web service. Currently, MobileMe costs $99 per year, but Apple may be planning to make the service free.
Apple may also add music backup — similar to the feature offered by Lala, which Apple acquired in December 2009 and shut down a few months later. Google has also been working on an online music “locker,” but has run into problems with licensing.
Apple recently opened a massive new data centre in North Carolina, and is apparently already planning an expansion. This could help it meet capacity needs as millions of new users take advantage of the service.