Apple rumoured to be working on entry-level iPhone 5 -

Rumours are abound that Apple is working on a budget version of the iPhone 5, which would have the potential for some serious competition to the lower end of the Android market.

Unnamed sources, cited by Bloomberg, suggested that a “nano” version of the next iPhone is in the works and that a prototype is already available.

The model is said to be a third smaller than the current iPhone 4 and lacks a Home button, a move which is widely expected for Apple's next iteration of devices.

The device is expected to retail for around $200, significantly less than the the $600 or $700 you'd pay for a contract-free iPhone 4. Consumers can get the price of the current iPhone down to around this level, but only if they sign a two-year contract and part with their soul.

The entry-level iPhone 5 may never see the light of day, however, as the sources indicated that the plans may be delayed or scrapped altogether. They also suggested that very few people in the company know about the intention to hit the lower end of the market.

Smartphones are a relatively new craze, taking off big time within the last year or two, but the sharp rise of Android has allowed for a wide range of devices that tackle all price ranges, with dozens of cheap models out there or on the way.

Juniper Research previously indicated that by 2015 smartphone prices should drop to $80, with the technology becoming standard in place of old-fashioned mobiles. ZTE and Huawei are leading the charge in China for the cheap smartphone market, but it appears that no one can rest on their laurels in this battle.

Apple has always had high prices on its products and that has not impacted on sales, but with Android stealing its market share and offering phones that are often packing more under the bonnet for a cheaper price, it may be time that Apple pushes out a budget phone.