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.
Selling multiple new iPhone models would be something new for Apple. Under former Chief Executive Steve Jobs, Apple prided itself on prioritizing profits over scale and offered a relatively small number of products mostly targeted at the high end.