I wonder how much market share iPhone would have to drop to before Apple start lowering the prices. Are they going to stick with the same mentality as they have with the computers and put up with just 7%?
EDIT: Saying that, they only have 12% this year anyway. All of my family have now abandoned iPhone for cheaper Chinese android phones.
Market share is meaningless when you take 90% of the profits from the entire market. The market has grown faster than Apples overall unit shipments (particularly due to emerging markets), but in their core markets like the USA and Europe iPhone is closer to 50%.
Their core market is people with disposable income. What drives the demand from the young people these days, they see their favorite celebrity posting on Instagram with an iPhone, they must have one. It is as much a status symbol as it is about having the best phone, its no different to cars. How many people rent the latest car they cant afford to buy to keep up with the Jones'? Back in the day it was all about BBM with 'the kids', now its iPhone.
They will not compete with cheap $200 phones at the low end which is where the majority of the volume is and there is exactly $0 to be made trying to put cheap phones in the hands of people in India/China etc.
It's no different to the PC market, all the volume is in £300-£400 units, so Apple miss out on a huge portion of the 'market' but they take most the profit from the high end.
Its a very clever place they have positioned their brand, all the other brands aspire to replicate it but fail miserably most of the time (MS, Samsung, HTC etc.). I think if Google cut out all the 3rd parties and pulled together a consistent quality offering for a few generations they could start eroding some of Apples profits but it would take some serious effort and risk.