The Apple rumor mill has been predicting a "low-cost iPhone" for so long that it's tempting to dismiss new whispers immediately. Like the fabled Apple television set, it has so far been talked up mostly by analysts and rumor sites filling time between actual product announcements.
We don't know anything about Apple's future iPhone plans, and it is the company's wont to maintain radio silence on future products until it's actually up on stage rattling off the new product's features. That said, a new kind of iPhone made specifically to address more price-sensitive markets—the markets that the iPhone 4 and 4S address currently—actually doesn't sound all that ridiculous these days. Apple's current strategy of selling flagship models from previous years at a discount isn't particularly well-suited to a competitive landscape where the company's competitors spit out a new phone every few weeks. We don't yet know that this "low-cost iPhone" is real, but here's why it would make sense to produce one and what it might look like.
Apple be nimble, Apple be quick
The most convincing case to be made for this new iPhone's existence isn't cost, but flexibility.