What is Apple's Product Strategy -- Strategic Rigidity or Enlightened Expansion?

Rumors are flying that Apple has a cheap iPhone in the works.  Coming on the heels of the iPad Mini, a growing chorus of groans is hitting the Twitterverse and blogosphere (to use two horrific terms) bemoaning that Apple is turning its back on Steve Jobs’ obsessive commitment to über product superiority; i.e. the best or nothing!
Perhaps.
But consider this:

• The iPad mini is NOT a watered down iPad.  It’s a fundamentally different form factor that has different use patterns (e.g. a lot more e-reading) and different users than the full-size iPad. For purists who believe Steve Jobs would never have compromised the size of the original iPad (as if a 9.5” X 7.3” rounded-corner rectangle were handed down from the gods), keep in mind that the iPad Mini still sells at a considerable price premium to other similar sized Android tablets.  The Mini’s screen resolution may not be best in class (for now), but there’s no doubt that the smaller Mini benefits from Apple’s elegant design, pleasing user interface and extensive apps library.  It’s still an Apple product

• Apple has created a powerful ecosystem of cloud-connected devices. It is in their interest to ensure that consumers can continue to affordably access multiple devices on iCloud.

• Apple’s growth prospects are increasingly tied to Asian markets, where price sensitivity is greater than in the US.  For those with the appetite and wallet for Apple’s very best technology, the company is continuing to roll out new products at an accelerating pace.  For billions of other consumers who might think an iPhone “Lite” is still an astonishing product, it’s a good thing for the company and its consumers that they now have a choice.

• This same angst dogged the product line expansion of German luxury carmakers as they began straying from their original über car roots.  In the 1970’s for example, Mercedes Benz ONLY made large, expensive sedans and a big-engine roadster. But as their global popularity grew, MB progressively expanded to midsize and (sacré bleu!) compact cars as well.  The purists were outraged that the company was abandoning its elitist roots.  But Mercedes wisely asked itself, “if a customer only has need for a more affordable small car but still wants a Mercedes, what would it look like”?  And so they produced smaller sedans and coupes with the same engineering refinements that makes a Mercedes, well a Mercedes.  Ditto with Porsche who started selling a four-door sedan (the Panamera -- sacré bleu squared!) in 2009. Still a Porsche, through and through.

• So the challenge for Apple is to ask itself, if a consumer wants an iPhone (perhaps a first phone for a teenage daughter) but not necessarily with all the bells and whistles (and price) of a top-of-line model, “what would a lighter duty version look like – and still be an Apple”?

Strategic rigidity to an unwavering elitist ideal would not serve Apple well going forward, nor would reckless abandonment of its core
values.  I’ve seen little evidence that Apple is moving in either of these undesirable directions.  But like all great companies, the brand is only as good as its newest products.  Roll on.