In China alone there were 300 mil smartphones bought in 2012. In the US aapl controls over 50% of the smartphone market. The iphone is the most coveted product in China having cult like appeal. If aapl gets a China Mobile deal they can easily sell 80 mil additional iphones in China alone in 2013. That is great growth and why aapl just keeps its mouth shut and executes their business model.
Apple will never sell a low margin phone. They may sell a lower priced phone but I assure you it will have a very nice margin. The key here is what deal they strike with China Mobile. This has been a tough negotiation but China Mobile is losing market share because they don't offer the Iphone so both companies have a lot to gain from striking a deal. Apple also can now meet the needs of china Mobile's system using qualcom's technology so I suspect a deal will happen in 2013.