iCloud iPhone Launch At iPhone 5 Release Event Possible?

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Long gone are the days when our mornings started with a bunch of rumors revolving the cheaper, contract free iPhone Nano. However, it seems like Apple is going to take some of the purported features of the iPhone Nano, marry them with iOS 5 and iCloud in order to release what's currently being internally referred in Cupertino as the iCloud iPhone.

iCloud, is Apple's latest cloud based services offering to the masses. It's sort of like MobileMe on steroids. Using cloud technology, your iPhone, iPad and iPod touch running iOS 5 firmware remain perfectly synced at all times. iCloud also saves you from the hassle of transferring all your contacts, emails, apps and other data manually on a new iOS device, simple enter the Apple ID through which you've made backup of your content on iCloud and the service will automatically push over all the content to your new device.

According to this report, which naturally is citing people familiar with the matter, we are to believe that Apple is working on a cheaper, contract free iPhone and is internally calling it the iCloud iPhone. It is a big probability that the new cheap iCloud iPhone won't be housing much storage on board rather it will do all its business in the cloud, using iCloud.

These sources claim that at the alleged iPhone 5 release event in September, Apple will release not one, but two iPhones, the other being the iCloud iPhone of course. The iPhone 5 specifications will be in lieu with the recent rumors we have seen indicating towards a tapered and thin, lighter, obviously faster and more storage capacity holding iPhone 5. Whereas the iCloud iPhone will be cheaper, possibly being priced at $400. Why would the iCloud iPhone be cheaper? Apple will drastically cut on board Flash memory which staggeringly accounts for 15% of the total manufacturing cost of one iPhone 4. Not only that, while the iPhone 5 will be an iPhone with major updates, the company can very well use iPhone 4 components to make the iCloud iPhone and by cutting the 15% storage memory cost on all devices manufactured, Apple can actually make a ton of savings and can drop a $400 priced iPhone in our pockets.

As far as the design is concerned, a MacBook Air like iCloud iPhone design is being claimed, however we obviously can't be sure until we hear the official details from Apple. Nevertheless, by launching a cheap contract free iCloud iPhone, Apple will be venturing in to grounds it has previously kept it self far away from. The mid-range smartphone market is generally ruled by Android devices and by releasing an iPhone which falls in that price point, Apple may be able to eliminate competition in the mid-range market, just as it has done in the high-end smartphone market. Thoughts?