Recently, Neowin reported on a rumor from Bloomberg that stated Apple is working on a new model of their iPhone that would be smaller and cheaper than the iPhone 4, somewhat like the dubbed iPhone Nano. Now The Wall Street Journal is getting behind what Bloomberg has already reported while also raising awareness of a potential major MobileMe change.
According to The Wall Street Journal, who cited "people familiar with the matter," Apple is working on an iPhone model that is "half the size" of the current iPhone 4 and will be sold alongside the current line of iPhones; one of its codenames is N97. They state that the smaller iPhone will have an "edge-to-edge screen that can be manipulated by touch, as well as a virtual keyboard, and voice-based navigation," all of which sounds similar to the current iPhone. Though, they did mention that the iPhone 4 is expecting an update as well, so it's not certain if that update is just the evident iOS 5 that will be released or if "voice-based navigation" is different than the current voice control feature.
They also confirmed that it will be sold to mobile carriers at half the price of the current iPhone, which would lead us to believe that it would, in fact, cost consumers a considerable less amount of money. WSJ says that it would allow carriers to subsidize most, if not all, of the cost of the phone.
Apart from the iPhone Nano, WSJ says that Apple is working on an overhaul of MobileMe; they hope to remove the $99 a year pricetag and make it free while also converting it into more than just a cloud storage service. MobileMe would allow users to access their music, photos, and videos remotely from their iOS devices through the Internet so that the devices would not need to come with much storage.
WSJ expects the smaller iPhone and the new MobileMe to be released as soon as this June, when Apple usually refreshes the iPhone line, but it depends on how well Apple's licensing issues are dealt with as the company wanted to release the service last year.