Japanese Apple-news site Macotakara said such a device is slated for 2014. It will use a polycarbonate plastic enclosure, similar to that found on Apple's MacBook. It's also rumored to sport a 4.5-inch screen, which would be half an inch larger than the one found on the iPhone 5 and iPod Touch. That short of screen would rival the size of the screen of such devices as the Samsung Galaxy S III (4.8-inches) but would still fall short of the Samsung Galaxy Note II phablet (5.3-inches).
Samsung is also expect to increase the size of the upcoming Galaxy S IV to 5-inches. It's unclear if the larger-sized iPhone would maintain the same aspect ratio of the iPhone 5 (and latest iPod touch), which resulted in a narrower device that other 4-inch smartphones.
Reportedly, the device will still carry Apple's traditional home button, along with a $330 price tab -- unsubsidized. The price for an unsubsidized iPhone is $649, and that is the traditional price point for such a device.
If true, it would be an important step for Apple in two ways. One would be to increase the size of its device screen -- it is something consumers have come to demand. The second would be to create a device that has a low enough price -- unsubsidized -- for emerging markets.
Rumors of a cheaper iPhone have been circulating for years, but ramped up in the last few months. Many analysts believe that a cheaper iPhone for emerging is the only way for Apple to combat the multiple form factors and variety -- both high- and low-end devices -- of Android.