Apple is reportedly working on a new line of iPhones designed to better compete with the growing range of smartphones running Google's Android platform.
A person who claims to have seen a prototype told Bloomberg that Apple is preparing a cheaper, smaller version of than the existing iPhone, but said they haven't seen the device since last year.
The Bloomberg source claims that the device will cost around $200 SIM-free.
By releasing an iPhone Mini, Apple would be looking to compete against the likes of the HTC Wildfire in the global mid-level mobile phone market, largely dominated by HTC, Nokia, Samsung and LG.
Apple is also developing technology that would allow consumers to use the iPhone on multiple wireless networks, two people told Bloomberg.
The company is reportedly aiming to unveil the device near mid-year, the sources said, but there is a very good chance that Apple the plans have been delayed or scrapped.