Apple working on a less-expensive iPhone, sources say

Sept. 21, 2012: An Apple employee riles up his coworkers outside the Fifth Avenue Apple store to celebrate the release of the iPhone 5, in New York. Hundreds of people waited in line through the early morning to be among the first to get their hands on the highly anticipated phone. (AP Photo/John Minchillo)

Sept. 12, 2012: Phil Schiller, Apple's senior vice president of worldwide marketing, speaks on stage during an introduction of the new iPhone 5 at an Apple event in San Francisco. (AP Photo/Eric Risberg)

Apple is working on a lower-end iPhone, according to people briefed on the matter, a big shift in corporate strategy as its supremacy in smartphones has slipped.

While Apple has explored such a device for years, the plan is progressing and a less expensive version of its flagship device could launch later this year, one of the people said. The cheaper phone could resemble the standard iPhone, with a different, less-expensive body, one of the people said.

One possibility under consideration is lowering the cost of the device by using a different shell made of polycarbonate plastic; in contrast, the iPhone 5 currently has an aluminum housing.

Many other parts could remain the same or be recycled from older iPhone models.

Apple could still decide to scrap the plan. A spokeswoman for the Cupertino, Calif., company declined to comment.

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Apple now faces greater pressure to make the iPhone more affordable. An onslaught of lower cost rivals powered by Google's Android operating system are gaining market share. In the 2012 third quarter, Apple held only 14.6 percent of worldwide smartphone shipments, down from a peak of 23 percent in the fourth quarter of 2011 and the first quarter of 2012, according to IDC.

For more on Apple's future plans, see The Wall Street Journal.