Despite the months of speculation that the future of Apple hinges on a rumored "cheap iPhone," it turns out this magic device already exists: when given the option to buy the brand newest, fastest, sleekest version of the iPhone, a lot of people choose a cheaper, totally decent version instead. During this week's earnings report, Apple posted better-than-expected phone sales not because of the fancy new(ish) iPhone 5, but because of the iPhone 4 — the cheapest and worst performing of the three Apple phones for sale these days. The iPhone 5 is still its best seller, but the 4 — no, not its successor the 4S — is "a key reason" for the overall rise in phone sales, according to The Wall Street Journal.
Apple doesn't break out exact sales figures for each of its devices, but reported that the average phone price dropped to about $580 from $613 last quarter, and CEO Tim Cook cited sales of the iPhone 4 — which is available on the Apple Store for $0 with a two-year contract or $450 unlocked — as the reason. "We want to attract as many of these buyers as we can," he said during the analysts call. These buyers are people that want the cheapest possible iPhone they can get. Note how these people don't choose the iPhone 4S: a markedly better phone, that retails for only $99 more. They want an iPhone for as little as possible. For them the iPhone 4 is the cheap iPhone.