In an interview with Bloomberg, Robert Chen, analyst with Goldman Sachs Group said “Apple’s going to put a lot of innovation, not just on the hardware, but also on the software of the new iPhone.” The next generation iPhone will have a Magic Mouse like touch sensitive plastic casing and 5-megapixel camera. The handset will include updated version of iPhone OS that will bring many new software innovations. Chen believes that next iPhone will go into production as early as April and ship in June or July.

Also Cringely wrote on his blog “We’ll surely see at least two next-gen iPhones, too – a smaller form factor in the Nano tradition and a 1GHz processor on something like the current model. Apple will remain atop the smart phone market, where Android may eventually threaten, but not yet.”

Our sources also say that Apple is working on more than one iPhone model and the company definitely wants to expand the iPhone portfolio to gain more market share.

On the tablet side, Apple has filed a patent application for use of stylus on capacitive touch surfaces like the one found on iPhone or the one Apple will use on upcoming tablet. According to MacRumors, “The document explores the use of a stylus on modern devices such as the iPhone, which are typically tuned for finger detection. Unlike older resistive screens, the new capacitive screens require styluses to have special conductive tips in order to be recognized.”

A debate has been going around the blogosphere about what input method Apple will use for its upcoming tablet, as it would be difficult to type on a 10-inch screen like you do on your iPhone. We believe that Apple will use a combination of various input methods rather than just depend on finger input like the iPhone. For example, you could use your finger for functions like navigating, launching applications and basic input. But for things like taking notes you could use a stylus or even a pen like grip made by joining two finger, making it easier to input data with one hand while holding the tablet in other.