The web is blowing up with news of a new, cheaper iPhone aimed to compete with the mid-range Android handsets. This has many people talking about weather or not its a good idea, and has helped cause Apples stock into a fall back towards earth. I'm here to tell you that it is a good idea, in fact, its a great one. Not everyone can spend $200 after carrier subsidization. But this Mid-Range device is already here, the iPhone 4s.
From my experience selling phones, I can say that here in the United States, people who buy iPhones buy them because of the logo on the back. They buy them because they want a "premium brand," and they buy them because they can buy an Otterbox that has a hole in the back so you can see your apple logo. They buy them because TV ads convince them that it is "the most innovative product yet" and because they are "cool." The main exception to this is customers who want a smaller screen size with out a compromise in features, or those who already use Apple's ecosystem, and own an ipad and a macbook.
The catch here is that Apple already offers a mid-range phone, last years model. For half the price someone can get a very capable iPhone 4s, with about 95% of the features of the current model. So why would apple waste resources on making something they already have?
The way I see it, today, the iPhone 5 competes with the Samsung Galaxy SIII, HTC ONE X, LG Optimus G, Google Nexus 4, and the Nokia Lumia 920. While the iPhone 4s competes directly with the similarly priced HTC ONE S, Samsung Galaxy Victory, Google Galaxy Nexus, and LG Viper. There is also the iPhone 4, which is free on most carriers if you sign a two year contract, that competes with low end, free Android phones. So Apple should not be wasting its time and money on a market that they already have a foot in.
Google's Android OS is already on 10" Tabs, 7" Tabs, phoneblets, high-end phones, mid-range phones, and low-end phones. Apple competes in all these categories but one. The phoneblet. Apple has the iPad, iPad mini, iPhone 5, iPhone 4s, and iPhone 4.
A "phoneblet" is a device somewhere in the middle of a tablet and a phone. These devices range from 4.8" to 7" screens and have the ability to make phone calls over a cellular network.
The Samsung Galaxy Note 2 is running wild right now and Apple has no answer in sight. Apple needs to make a competing device to the Galaxy Note and ditch the idea of a "budget" phone, or they risk falling far far behind. What separates apple from the pack is they are seen by many as a "premium brand" and risk tainting that with a low end model. Steve Jobs must be turning over in his grave right now.