Although I'm sure this story's BS, the whole upgrade route is something to think about.
Apple's been down this road before as they lost the PC market to lower-cost competitors. Even when someone was ready to move up to a high-end PC, it was too late. The consumer was already used to Windows, had invested in applications, and perhaps even more importantly, the Mac's low market share led to a dearth of applications.
It could happen again in the phone market if Apple doesn't strategize correctly.
You're revising history. Early PCs were not less expensive than Apple's offering of the day. What got PCs ready acceptance was the IBM name on the box. It wasn't until an inexpensive chip set became available that a lot of OEMs got into the game and began to build reasonable quality PCs that enterprise was willing to buy that prices came down. The price drop was caused because no one had a way of differentiating one box from another except by price, and the IT of the day were highly confident of anything connected to the IBM name.
I will give IBM this: They got out of the PC business LONG before anyone else saw where the race to the bottom would lead to today.
I see the emerging markets of today as a different landscape then the early computer days. Today the iPhone is as easily fit to any phone services as is the Andriod phones. The OS of the phone does not cut out one brand or another like the PC-DOS vs Apple II split did in the 1970s. Apple just needs to stick to their knitting and market to the governments and large businesses of the countries in question. The users who bicycle to and from their tiny market stalls have no reason to care what OS the phone uses as long as its cheap enough to buy and lasts them long enough.
My personal opinion is that targeting the average citizen of these emerging markets will turn out to be a boondoggle and those chasing this consumer market will lose their shirts in the process. No matter what country one does business in, it will be a cat fight for the business. Going to where even less will be sold at a thin profit margin is a pipe dream. Look at Nokia. They were and may still be the king of the low-cost phone markets for decades. How much loyalty did that earn them?