Bloomberg is citing -- you guessed it -- "people who have been briefed on the plans" as saying that Apple is hard at work on taking the iPhone downmarket with a new model that's roughly one-third smaller than the existing iPhone 4, possibly with the intent on delivering it midyear using mostly carryover components from the iPhone 4 to keep pricing down. Thing is, Bloomberg says that Apple is looking at launching the "cheaper" model at $200 off contract, which would be the same as the 16GB iPhone 4 on contract currently. Let's not understate the fact that $200 off contract is dirt cheap by modern smartphone standards, which means Apple would have to be using every scrap of its enorm
