Is Apple Making Cheaper iPhones to Battle Google?

A report published in Bloomberg claims that Apple is working on a new line of cheaper iPhones as its way of battling Google’s Android.
According to its source who has seen the prototype, a new iPhone model is being made “cheaper and smaller than the most recent iPhone.”
By small, the source meant that it is one-third smaller than other iPhone models. And by cheap, Bloomberg claims that Apple plans to sell the new model for US$200 without requiring users to sign a contract.
Apart from a smaller iPhone, the report also says that Apple is developing a dual-mode iPhone that would work on both GSM and CDMA networks. Although it would be practical for the next iPhone to be both small and dual-mode, but knowing Apple, they would probably make two separate models.
We will keep you posted.