Apple Prepares iPhone 5 and Cheaper Cousin: Report

Apple is getting ready to launch two phones, according to people familiar with the matter, confirming rumors that have run rampant for months which suggested another phone would join the launch of the iPhone 5.

The Cupertino, Calif.-based consumer electronics company has already begun manufacturing a lower-cost iPhone 4 that will come around the same time, as the iPhone 5, according to Reuters, citing Asian manufacturers.

The phone, with 8GB of memory, will help Apple break into lower-priced, broader markets, particularly in the emerging market segment.

It is in talks with Chinese carriers China Mobile and China Telecom, both of which are eager to carry the device, giving Apple an inroads into a lucrative and sprawling growing Chinese middle-class.

A lower-priced version of iPhone 4 seems to be a necessary evil at this point in the iPhone adoption cycle, especially in emerging markets where the average income of individuals is much lower, Channing Smith of Capital Advisors Growth Fund told the agency.

Trouble for Android

Mobile industry analysts also say that Apple has already begun production on the iPhone 5, the next generation of its venerable smartphone, expected to feature the A5 processor from its iPad 2 cousin, and higher screen resolution.

The roll out is expected not only to boost Apple revenue, but also wrench away the market leader position from arch-rival Google.

At the moment, Google's Android platform reigns supreme among mobile users , having a healthy installation across a number of devices. But even the current iPhone models virtually halted this.

Couple this with the upcoming iPhone 5, and what some dub the iPhone Lite analysts are predicting that Google may have to step down from its No. 1 spot.

In our opinion, this is just the beginning of Android's share loss in the U.S., according to Needham analyst Charlie Wolf.

Android commanded 36.2 percent of worldwide smartphone market share in March.

But its month-to-month gain was just three percentage points, down from a 7.5-percentage-point gain in the December quarter, and a 9.5-percentage-point gain in the September quarter.

The slowing is because the Android platform fell from 52.4 percent of U.S. smartphone sales to 49.5 percent in the quarter - Android's first sequential loss in any region.

On the contrary, iPhone rose from 17.2 percent in December to 29.5 percent by March, according to IDC numbers.