iPhone nano rumours hot up with report of edge-to-edge screen prototype

More details have emerged of Apple's early-stage plans for a smaller, cheaper iPhone to be released as soon as this summer. It could debut alongside a revamped version of Apple's MobileMe service, which would make it easier to access your music, photos and videos from the cloud.

The iPhone nano rumour has been bubbling for a couple of years now, but reared its head again last week in a report from business site Bloomberg. Now the Wall Street Journal has joined the fray, with a source who claims to have seen a prototype of "a new line of less-expensive iPhones" that is "about half the size of the iPhone 4".

That's a point of disagreement with Bloomberg's mole, who claimed the new device would be two-thirds the size of the current iPhone.

The WSJ goes on to claim that the iPhone nano prototype was "significantly lighter than the iPhone 4 and had an edge-to-edge screen that could be manipulated by touch, as well as a virtual keyboard and voice-based navigation". It predicts a SIM-free price point half that of the main iPhone, to compete with cheaper Android handsets.

The MobileMe revamp sounds interesting, too. Apple apparently wants to make the service entirely free -- currently only certain features, such as Find My iPhone, are free -- while shifting its focus towards being a cloud locker for photos, music and videos. The report claims the new Mobile Me could launch in June, and would work on existing iPhone 4s, as well as new Apple devices.

The WSJ's sources suggest social networking would be tied in, and that it could also "become a focal point for a new online music service that Apple has been developing for more than a year", hinting at Spotify-style on-demand streaming.

iTunes in the cloud, iPhone 5, iPad 2 (and indeed iPad 3), iPhone nano... 2011 is shaping up as a big year for Apple, as it faces stiffer competition from rivals such as Samsung, HTC, HP, LG and (in the longer term) the Windows Phone 7-fuelled Nokia.