Yes, Apple's hypergrowth is over and margins willl collapse. The competitors offer superior devices, which are much cheaper at the same time. Remembering the maps disaster there's no doubt competitors even passed Apple on content.
Hard to argue that higher margin phones are better. We don't yet know what the margins are on the cheap phone. It may not be a bad play to expand revenue and get users into the Apple ecosystem of apps, music, movies and more importantly upsells to iPads and Macs.
I think this is Apple's mistake to concentrate on cheaper iPhone. I mean this is a good idea but Apple must also work in more expensive set of diverse iPhone models (first of all, different SCREEN SIZES but not only that). I am absolutely sure customers would happily buy expensive iPhone (even in low-income countries) if it has bigger screen they want because they know that Apple is QUALITY, OUTSTANDING DESIGN AND PRESTIGE. This way Apple would overwhelmingly compensate for lower margin of cheaper iPhone. Hey, Mr. Cook - you need to read Stock Market message RIGHT! Just cheap iPhone is not the solution - make MORE models, make DIVERSE models! Just do it and Apple stock would soar 1000$ and higher absolutely!