Apple plans to release smaller and cheaper iPhone.

Apple plans to release a smaller and cheaper iPhone later this year to maintain its dominance in the tablet market, as Google and Microsoft are preparing to compete in the segment of mobile devices, said two people familiar with the plans of company.

The new model will have a smaller screen than the current version of 9.7 inches and probably will not bring high-definition screen displayed on the iPhone launched in March, informed people.

A smaller and less expensive iPad could undermine the ambitions of Google, Microsoft and Amazon to win space on the tablet market, said Shaw Wu, an analyst at Sterne Agee & Leach Inc. The new device will probably have a price closer to the Nexus 7, tablet announced by Google, and the Fire Kindle, Amazon’s tablet, both of which have 7-inch screen and cost $ 199. “It would be the worst nightmare of competitors,” Wu said in an interview. “The ball is in Apple’s court,” he added. Trudy Muller, a spokesman for Apple declined to comment on the matter.

Since the iPhone went on sale in April 2010, Apple dominated the tablet market, within which DisplaySearch forecasts will hit $ 66.4 billion this year.Apple owns 61% of the segment, according to research firm Gartner.

Apple’s rivals are eager to gain space. Google said last week it will launch a tablet named Nexus 7. Earlier this month, Microsoft announced a tablet called Surface, which has a screen size similar to the current version of the iPhone.The Fire Kindle, Amazon, was launched last year.

The best alternative to Apple’s competitors have been the focus in markets where the rival has a foothold. Surface will have two models that are likely to attract the interest of consumers who want to continue using Windows, Microsoft software, said Dawson. Although Microsoft has not announced pricing or time to market, the most advanced version of the device is likely to be more expensive than the iPad. The price ranges from the latest Apple tablet ranging from $ 499 to $ 829.

The Nexus 7 can be a good competitor to Kindle Fire, Amazon, which was released in November. The Google tablet, manufactured by Asustek, has a faster processor and better battery life than the Amazon device, and a front camera. Still, competition with the iPad will be more challenging, Wu said, citing the benefits of Apple having more than 225 000 applications developed specifically for the iPad.

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