Based on the pricing we're seeing on the 5C (some offers for $50 or $100 less than announced price) Apple is putting some flexibility in its wholesale pricing to give third parties more wiggle room with the 5C. So it's by no means a "cheap" phone, but it's not as expensive as it first appears.

As for Apple gaining market share in the US, I think what we've seen is that Android is starting to run out of feature phones to replace, so it's now in a fight for the high end space with Apple, which will probably see movement in both directions for a while. I suspect a significant portion of the iPhone market and a larger portion of the Android market is really just phones with touch screens -- these are people who don't buy apps or use most of their phones' capabilities. The "network" effects that will determine the fates of the ecosystems depend on people using their phones as computers rather than merely phones.

In Europe recently Windows phone (i.e. Nokia) is doing very well. It will be interesting to see how that plays out too.

I don't think it either a "serious downmarket move" or a "token". I think it is the iPod mini for the iPhone generation. It is the hint at the iPod strategy moving to the iPhone after all this time. I would imagine we are a generation or two from the actual downmarket move.

They gained share on Android last quarter, which doesn't include their newly launched phones. Horace Dediu raised the idea that Android has peaked in the US a few months ago, and the latest numbers seem to back him up.

http://9to5mac.com/2013/10/04/comscore-apple-gains-on-androi...

https://twitter.com/asymco/status/386207186801917952/photo/1