Apple Thoughts: Weekend Rumours: Smaller, Cheaper, Contract-free iPhone

"Apple Inc. is working on new versions of the iPhone that are aimed at slowing the advance of competing handsets based on Google Inc.'s Android software, according to people who have been briefed on the plans."

According to Bloomberg, Apple is working on a new, smaller iPhone that will be sold contract-free for around 200 dollars, using (surplus?) components currently in use. No home button, and one third smaller than the existing iPhone. Target markets mentioned are China and India. Also mentioned are a dual-mode iPhone, using GSM and CDMA technology, and a "universal sim" model, allowing connection to any adjacent (GSM) network (but not "roaming"). The so-called "self-configuring" models would allow activation with minimal user/retailer intervention.  While the article states pretty emphatically that these devices may never see the light of day, they do seem plausible with the growing emphasis on contract-free, pay-as-you-go (PAYG, aka pre-paid) services. I would love to see this happen, as I would enjoy owning a PAYG iPhone without spending a fortune on a factory-unlocked model.