iPhone 5 won't be smaller, but could be cheaper

Persistent rumblings about the next generation of Apple's iPhone have recently reached fever pitch with the world and its Wi-Fi perpetuating rumours, grabbing at straws and plain old making stuff up to second guess Jobs' Mob on what the Fifth Coming of the world's favourite handset might entail.

A report from a Taiwanese tech site with a good reputation for grabbing the scoop on Apple developements suggested yesterday that the company has three next-generation prototypes in testing.

We dismissed the possibilty of a slide-out keyboard because of Apple's continued advocation of its much-copied on-screen input method. We also called bunkum on the possibility of miniaturised iPhone Nano mostly on the grounds that every smartphone builder on the planet - including Apple, if the rumour mill is to be believed - is sticking to the principal that bigger is better.

We also suggested that the only reason the company could have for making the iPhone smaller would be to make it cheaper:

"We've now heard so many rumours about an iPhone Mini, or Nano, that we're actually almost starting to believe them ourselves now... but not quite. The only reason Apple could possibly have for shrinking the physical dimensions of the iPhone 4 would be to reduce the price. The Retina Display is one of the most costly components in the iPhone so it would make sense if Apple wanted to get into a price war with bargain bucket offers from cheap Chinese outfits flogging Android-based smarties, smaller would be the way to go.

The intriguing thing is that several news outlets, including the New York Times, have published news stories this morning quoting 'sources close to the matter' saying that Apple is doing exactly that.

Now, we've had a bit of an issue with people constantly citing 'people close to the matter' as a viable source recently, but we had no idea they were talking about us.