iCloud iPhone Rumor – Free Handset: Launch Alongside iPhone 5

Today we have some interesting news for those of you following developments for the Apple iPhone 5, and we know there are many of you. We have detailed rumors over the last few months about a cheaper iPhone from Apple and new speculation today suggests an iCloud iPhone will be a cheaper alternative to the iPhone 5 and launched at the same time.

Talk of a low-cost iPhone has been rife as for many the iPhone is just out of reach and yet many would love to have an Apple-branded handset. Back in June our Maddy Rowe told of different pricing levels for the iPhone and in an infographic we detailed at the end of June a 30% chance was given for a low-cost iPhone 5. We’ve also heard the rumors of two iPhone’s being launched an iPhone 4S and iPhone 5 and in another post told of more rumors of an ‘economy iPhone’ where the chances of it were put at 42%.

However lately talk of a cheaper iPhone 5 alternative had died down, until today when we spotted an interesting article by Philip Elmer-DeWitt over on Fortune at CNN, sourced from Trevor Sheridan at Apple’N’Apps. Elmer-DeWitt tells how a device referred to by Apple as the iCloud iPhone, could even have a subsidized cost of $0.00 as it will be made from iPhone 4 parts with a lower memory. Sheridan cites three “independent sources” all connected to Apple saying that there will indeed be two iPhones released this fall, the other of course being the iPhone 5.

Sheridan’s logic for the cost of the ‘free’ ‘iCloud iPhone’ stems from a targeted price of $400 which is approximately $200 less than the iPhone 4 unsubsidized cost. With the usual subsidies available, the starting cost to consumers on a two-year contract could be nothing. Sheridan goes on to tell how the iPhone 5 will be the major upgrade that many are waiting for but that both models are in production according to a source. Yesterday we wrote about the Motorola Droid Bionic being quite a thick phone because of the larger battery required for 4G LTE and Sheridan also states that the iPhone 5 will not be 4G LTE because of the size of the printed circuit board that would be needed.

The cheaper iCloud iPhone would be possible with less onboard Flash memory and because iPhone 4 parts have lowered in price and the handset would be aimed at those who are willing to use cloud storage and have less capacity on their phone. It’s rumored to have an aluminum back as on the iPad 2 and one of Sheridan’s contacts states that “Apple is cutting the cost of making an iPhone 4 without sacrificing any of its qualities.”

Of course we cannot verify any of this information just yet but it’s certainly interesting and would make sense. Many consumers are waiting for the full-blown improved iPhone 5 but do you think many others would be happy to get an iCloud iPhone for free? We’d like to know your thoughts about a low-cost iPhone so let us have your comments.