Apple is in addition to a more traditional iPhone 5, also intends to launch an "iCloud iPhone" that will use the company's recently launched iCloud cloud computing service. ApplenApps, citing "three independent sources" claims that "Apple is planning to combine iOS 5 and iCloud with a piece of hardware internally referred to as the iCloud iPhone. The iCloud iPhone will rely heavily on Apple's new cloud based offering, and less on internal storage."
Apple is planning to hold a special event to launch the new iPhones, and the main takeaway is it intends to launch two iPhone models in the fall with a full upgraded iPhone 5 as expected, as well as a cheaper iPhone which will be the iCloud iPhone.
This iCloud version of the iPhone will be cheaper than the iPhone 5 because Apple will be using less on board Flash memory than the regular iPhone. The iCloud model will be for users who will want to use the iCloud heavily for storage, and keep a lot less on the iPhone itself. This will also help Apple make iCloud a feature by itself and reason to use the entire Apple ecosystem.
Apple is aiming for a $400 final price for the iCloud iPhone as compared to the typical $600 iPhone price, which the iPhone 5 will cost. To achieve the lower cost Apple will use many of the same internal parts from the iPhone 4, but will use a slightly different external design with an aluminum back panel similar to the iPad 2. Apple will go away from the relatively more expensive glass back panel. Also, the stainless steel band is speculated to be gone with simply a curved aluminum back, again like the iPad 2.
That should allow wireless carriers such as Verizon Wireless and AT&T to offer the phone for a very low price with a two year contract, possibly for free.
The iPhone 5 will include many new parts including processor, flash memory, and both cameras, and is expected to be thinner, faster, and lighter similar to the upgrade for the iPad 2. The A5 chip that powers the iPad 2 will be on board as well as Qualcomm's wireless chip allowing for GSM and CDMA to be in one model. There will be a new design that will offer small changes in response to the antenna problems of the iPhone 4 design. One source indicated that 4G LTE willn't be included because the first-generation LTE baseband processor and supporting chipset would require Apple to increase the size of the printed circuit board which conflicts with the thinner and lighter mindset.
The source also claims that Apple's iPhone line will share similarities with their MacBook line with the iCloud iPhone like the MacBook Air and the iPhone 5 as the MacBook Pro.
Two iPhone models are expected with an iCloud iPhone for free with contract and a full featured iPhone 5 for a late September launch.