According to the analysis of a certain Brian White, Apple intends to make a "bifurcation of the market," that is, to share the iPhone in two streams - the standard model and a reduced model with the plastic housing price of 250-300 U.S. dollars (in the U.S.).

The new iPhone could run under the name iPhone Mini or iPhone Air and should be particularly well received in China, where the standard iPhone is still too expensive. The net profit on a smaller model would be 10-15% lower than those on a standard iPhone, but the expansion of markets would open new sources of revenue from Brazil, Russia, India and China to Apple.

Thanks to the current price of the iPhone, according to the same analysis, 60% of the smartphone market was unavailable to Apple in the last year.

[Ed – If Apple does this it will be another nail in their figurative coffin. Right now Apple can run under the claim that they make “better” and more refined products which keeps their image as a luxury and must have item intact. By adding a budget line they will be admitting they are no better than every other manufacturer and will also show that their top end models have more room for price cuts than Apple wants to let on. Instead Apple could actually invent something new and keep that at its current price level while leaving the older generation devices available or pushing them to the emerging markets. We doubt they will do this though as Tim Cook is still a business man at hear and not really suited to running a company like Apple that exists and thrives because of the image and mythology they have and not due to any truly innovative products.]

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