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"Luxury/Cool" brand diluted by budget Iphone

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There is a simple reason that I believe a budget iphone will have negative effects on Apple. Apple is marketed and implements itself as a luxury/cool brand (unfortunately other phone makers do not realize this or do not use this to their advantage). 600 – 800$ dollars for a phone is just incredibly absurd(laptops and desktops can be bought for that price) and eventually the price will lower to a much more reasonable price (50-250$).

It would be the same as the everyday public buying Mercedes Benz and BMWs at 100,000 dollars… today there are many equivalent and cheeper and even better vehicles but Mercedes and BMW still sell cars due to their "luxury/cool" brand image.

But I am not here to complain about the price of smartphones, I am just saying that a non-luxury priced Apple phone (regardless of whether the itself phone is luxury or not) will dilute the apple brand image. The race to the bottom in the phone industry has so far been producing poor products (excluding maybe the lumia 520). However, tomorrow there will be many companies that will be able to match Apple’s quality for far less than Apple will be willing to sell their devices. Apple succeeds because they are valued for their "luxury/cool" products. These products maintain their appeal because there will always be those who cannot afford to buy 700$ phones. In releasing a budget phone they will make their phones more accessible and will likewise lose their appeal overall as a brand. No one will wants the exact same smartphone that everyone else has.

Therefore, if a budget phone is released it must be released only in places where a 700$ phone is beyond absurd… in places where such budget phone is still above what most can afford but not substantially so. Therefore, I believe this phone will be marketed to external markets and will still be priced above all other popular phones in those regions. (400$ maybe?) Any input?

Also make sure to check out this post by Verger1. It talks about the physical aspects that will drive this phone to success.

http://www.theverge.com/2013/7/30/4571118/apples-next-big-blockbuster-is-an-affordable-iphone

Please Note:

I am not arguing that the phone will be unsuccessful because it will be a massive hit. I am arguing about the long-term damage done by a phone like this on Apple's reputation and fanbase.

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