People want the iPhone. It's why Apple was only recently able to keep up with demand. And as Apple move away from exclusive deals in more countries and expand carriers, it shows that even the 11 months old iPhone 4 is still able to keep up with the newer (not necessarily better) competitors on the market. Ask AT&T about Atrix sales and ask T-Mobile with its slew of new Android devices but still managed to lose close to half a million subscribers.
It's not a surprise that we learn the two-year old iPhone 3GS is managing to even outsell the top Android devices. People want the iPhone. It's a clean mobile experience that is a joy to use. Still, outside of AT&T, the 3GS continues to elude users on Verizon, Sprint, and T-Mobile, the other three top US carriers.
This provides Apple with an interesting opportunity. Tim Cook has stated in the past that Apple does not plan on giving up any segment of the market to its competitors. Nor do I think it should. It makes very little sense for Apple to give up profit margins to do it either. It's anyone's guess how Apple plan on attack the lower-end smartphone market and get users to go with its mobile devices.
I don't buy the argument that Apple will make a cheaper iPhone. Any Wall Street analyst who suggests it should be fired on the spot. Just as Apple has said on the past that it did not know how to make a $500 computer that wasn't a piece of crap, Apple isn't going to come out with a $99 or $199 iPhone that is also a piece of crap.
I reckon that Apple will change the financial model a bit to make sure that it can earn back any money it sacrifices if it should decide to sell iPhones at a lower price. Perhaps, it might look to the iTunes ecosystem to help pad margins. That's just my guess.
Rest assured that Apple will address the low-end smartphone market. And the 3GS or a variant of it could be the key.
More at Loop Insight.