Rumours that Apple is preparing to launch a cheaper, smaller iPhone are gaining traction, with this Sunday's Wall Street Journal claiming the so-called 'iPhone nano' exists and may even arrive on the market later in 2011.

Clearly Apple is steadfastly refusing to comment on the rumour and speculation surrounding the apparent development of a smaller and more affordable version of its hugely successful smartphone but this is the second new iPhone rumour in a matter of days..

A patent relating to the so-called iPhone nano originally emerged back in the summer of 2009.

Memory-free MobileMe dependance

Graham Barlow, editor of MacFormat, said about the Apple news: "The stories are purely at the level of speculation and rumour right now.

"However, the fact that the Wall Street Journal is willing to nail its flag to the iPhone nano mast does add some credence to the rumour.

"Remember that the same thing happened with the WSJ running similar speculative rumour pieces about the iPad some time ago," adds Barlow.

"And also consider the fact that Walt Mossberg, the paper's tech correspondent, often gets Apple products in for review earlier than many others, as he has a very good relationship with the company."

The WSJ article follows similar rumour updates from respected sources such as Bloomberg and TechCrunch last week, with the latter suggesting that the 'iPhone nano' would cost in the region of $200 (£125) out of contract.

MobileMe makeover soon

The Journal also claims that Apple's MobileMe is set to get a significant makeover in June, encouraging more iPhone and Mac users make the move to the cloud.

On top of all that, the iPhone nano is also rumoured to have the absolute minimum amount of onboard memory for storage of media, which is one of the costliest parts of the current iPhone, with the device designed purely for streaming music, photo slideshows/videos, TV shows and movies from the cloud via MobileMe

The WSJ reports that: "MobileMe… would serve as a 'locker' for personal memorabilia such as photos, music and videos, eliminating the need for devices to carry a lot of memory."

Via The Wall Street Journal