The more I'm thinking about it, the more it seems that a low-cost iPhone might not be such a bad idea. A couple of generations ago, a low-cost iPhone would have been a bad idea because there was such a jump in performance between generations. Imagine having an A5 in the regular iPhone vs an A4 in a low-cost iPhone. Eww, that would handicap the development of iOS. But now, the performance gap between generations isn't as large for the average user. Think of comparing a Core i3 vs a Core i7. For the average user, a Core i3 is more than sufficient. At the very least, with current and future Apple chips, UI performance should be minimal between generations. Think of OS X. I'm willing to bet the average user can't notice much of a difference between using OS X Mountain Lion on a Core 2 Duo VS a new i7 without doing heavy processing or rendering. Of course, you and I can notice a difference, but we're more technical users, and even then, the basic UI isn't majorly faster on an i7. To make a analogy in performance, think of the Nexus 4 vs the Galaxy S3. The Nexus 4 has a quad-core Snapdragon S4 (similar to the rumored A7), yet the US Galaxy S3 has a dual-core Snapdragon S4 (similar to the A6). The Nexus is clearly more powerful but the Galaxy S3 is still very capable and sufficient for the average user. Perhaps that's what Apple is aiming for with a low-cost iPhone. Have a low-cost phone for the average users, and a "Pro" version for power users. If Apple can put a quad-core A7 in the next-gen iPhone and have an A6 in the low-cost iPhone, and keep that pattern to be 1 chip behind, it would be a success.