Jessica E. Lessin, The Wall Street Journal:

Apple Inc. is work­ing on a lower-end iPhone, accord­ing to peo­ple briefed on the mat­ter, a big shift in cor­po­rate strat­egy as its supremacy in smart­phones has slipped.

The less expen­sive iPhone has always been the pre­vi­ous iPhone model. For exam­ple, the less expen­sive iPhone right now is the iPhone 4S, which you can get for US$99 with a new two year agree­ment. The least expen­sive iPhone is the iPhone 4, which you can get for free with a new two year agree­ment. When the iPhone 5S comes out the iPhone 5 (with­out the ‘S’) will become the less expen­sive iPhone, and the iPhone 4S will become the least expen­sive iPhone. At least that’s how Apple has worked on lower-end iPhones since the orig­i­nal iPhone.

This year might be dif­fer­ent since the iPhone 5 has a Lightning con­nec­tor instead of the 30-pin con­nec­tor. I don’t think Apple, after it starts sell­ing the iPhone 5S, wants to sell a whole bunch of iPhone 4S’s with the old con­nec­tor when the price goes to zero. So maybe Apple is work­ing on a stripped down free iPhone 5. An 8GB ver­sion perhaps?

via John Gruber. Chinese news­pa­per Shanghai Evening News inter­viewed Apple SVP of Worldwide Marketing Phil Schiller. Matthew Panzarino, The Next Web:

“At first, non-smartphones were pop­u­lar in the Chinese mar­ket, now cheap smart­phones are more pop­u­lar and non-smartphones are out,” Schiller added later. “Despite the pop­u­lar­ity of cheap smart­phones, this will never be the future of Apple’s prod­ucts. In fact, although Apple’s mar­ket share of smart­phones is just about 20%, we own the 75% of the profit.”

Cheap smart­phones are pop­u­lar in China. Not-so-cheap smart­phones are, too. Let’s assume the top 10% of the Chinese pop­u­la­tion of 1.35 bil­lion can afford iPhones. That’s 135 mil­lion, which is prob­a­bly pop­u­lar enough—and prof­itable enough—for Apple to focus on serving.