Of Course Apple Is Planning a Cheaper iPhone 4 (Updated)

When Apple’s next-generation iPhone finally arrives at market, it may be accompanied by a more inexpensive version of its predecessor.

Reuters claims Apple’s manufacturing partners are ramping up production of a cheaper version of the iPhone 4. The device is said to have an eight gigabyte flash drive and is expected to hit the market this fall; Reuters says September.

Not that this should come as a surprise to anyone. Apple typically drops the storage on older model iPhones to 8 GB as it prepares to release a new version of the handset.

“As a matter of practice, Apple drops their old model iPhones down to the $99 price range when new models launch and extends the life of the older product by a year or more,” Wedge Partners analyst Brian Blair told AllThingsD. “We saw this with the 3GS and the 3G, and the iPhone 4 will see the same thing in the weeks to come. As the price of the iPhone components in older models drops, Apple can take the capacity of the older model down to 8 GB and sell the handset to carriers at a discounted price, putting it into the hands of more consumers.”

Particularly those in emerging markets. As we’ve noted before, a lower-tier version of the iPhone could be a real bonanza for the company in regions it views as prime targets for a more affordable iPhone.

“[A more affordable iPhone would allow] Apple and carriers to ease back on the device and service pricing and extend Apple’s reach into new and lower consumer segments with only minimal cannibalization to the iPhone’s high-end position,” Oppenheimer analyst Ittai Kidron wrote earlier this year. “Clearly, there is a large untapped market available to Apple once it lowers price, and it makes sense to approach these markets in the same way that the iPod found its way to lower price tiers.”