I think it's possible.
In MP3 player market, Apple makes big, medium and small iPods. Although it started with the big, Apple put out medium, then small iPods eventually. As we all know, this strategy worked beautifully.
I think it makes sense that Apple makes medium iPhone at some point, and, even small iPhone eventually. It's just a matter of time. Apple will need to calculate its moves carefully. I think Cook can handle it. I think this strategy can work.