Rumors of the next-generation iPhone have been flying thick and fast. Previous rumors suggested that Apple will launch a 4.8-inch iPhone and now word's on the street that the company will reveal two 4-inch iPhones in 2013, and the larger iPhone may not make its appearance until 2014.

Apple has had a competitive and a challenging 2012 and it seems that 2013 will be even more demanding for the company. According to a new rumor, Apple is preparing two 4-inch iPhones for 2013 with in-cell display technology.

"Previously it was said that Apple would release a lower-cost version of its iPhone with a bigger screen in 2013. But the sources claimed that Apple is indeed developing an iPhone with a bigger screen, but that will not be among the models to be launched this year," reported DigiTimes.

Rumors indicate that one of the two 4-inch models will be the iPhone 5S, while the other will be a low cost version of the iPhone. The latter is expected to have a polycarbonate body and come in various colors. To reduce the cost, the iPhone may also have inferior hardware specifications when compared to the current iPhones.

The in-cell display of the iPhone 5 has caused production delays and if Apple is planning on a lower-priced iPhone with in-cell display, then the company will have to ensure that it has an adequate supply of the same.

Previous reports said that Apple's Phil Schiller, Senior Vice President of Worldwide Marketing, has hinted that a low-cost iPhone will never be launched; however, rumors of a cheaper iPhone keep on appearing frequently.

Apple's smartphone line-up presently caters only to high-end users, whereas rivals like Samsung, Nokia, LG, et al have handsets for all segments. Judging by the current economic climate, market demand, and increased competition, a cheaper iPhone seems imminent in the near future.

Apple is expected to launch the next-generation iPhone 5S in March this year. We will have to wait and see if a cheaper iPhone also makes its appearance with the iPhone 5S.