The latest Apple rumor to surface suggests the company is planning to release a budget version of the popular iPhone handset known as the iPhone mini. Such a rumor would have easily been squashed previously but since Cupertino released a smaller and more affordable version of the iPad late last year, is the thought of a cheaper iPhone really that farfetched today?

The idea behind a smaller iPhone is simple – make it more affordable which in turn will open it up to a much larger user base. It’s no secret that Samsung is winning the proverbial smartphone battle as recent data shows the Korean electronics giant is expected to account for one third of all smartphones sold this year. Apple’s iPhone, on the other hand, is forecasted to capture 21 percent of the market, just a single percentage point more than last year.

Neil Mawston from Strategy Analytics told CNET that he believes Apple will launch an iPhone mini at some point within the next three years to cater to prepaid users that can’t afford the current iPhone.

Peter Misek from Jeffries echoed those sentiments, adding that we could see a cheaper iPhone from Apple as early as this summer priced between $200 and $250. He believes the project hasn’t gotten the go-ahead from Apple yet, however, because they are concerned that such a product could eat into their gross margins.

Either way, 2013 is shaping up to be another exciting year with regards to the smartphone market. Samsung will release the Galaxy S IV at some point, a revised Nokia Lumia line is rumored to be in the pipeline and it’s a safe bet that Apple will release some sort of iPhone later this year.

At this point, which new handset are you looking forward to the most?