Many websites including Bloomberg and WSJ are reporting rumors about Apple’s plan to announce a smaller and cheaper iPhone model. WSJ wrote the following about the new phone:

Both Bloomberg and WSJ have the same news overall, Apple is planning to introduce smaller and cheaper phone sometime this year. And both also point out that Apple will be introducing the smaller iPhone to compete with ever growing low-end Android phones, which are increasing Android marketshare at rapid pace, especially in Asia.

Asian countries like China and India are the fastest growing cellphone markets in the world. However, most cellphone users in both the countries buy unlocked handset and then use it with pre-paid plans, rather than signing a contract for subsidized handset like is US and Europe. This means that most cellphone user pay full price for the handset, making the iPhone very costly. For example, last generation iPhone 3GS is available for Rs. 32,000 ($700) in India and for RMB 5,000 ($900) in China. And the current generation iPhone 4 can cost as much as $1,200 in both the countries.

Those price points are very high for average consumer in both the countries. So, most new smartphone buyers are going for Android handsets that are available for as little as Rs. 12,000 ($260) in India and RMB 2,000 ($300) in China. And as we have seen in past one year Android marketshare has grown six times in 2010 when compared to 2009. If Apple could bring an iPhone model to Asia priced around $250, iPhone adoption can grow 10 folds with in next 12-18 months as smartphone market is in infancy when it comes to Asia.