Apple already has a second tier, and it's constantly ignored in all the discussions about how much more Apple devices cost than alternatives. The second tier is the resale market.
When I sold my 3-yr old iPhone, which cost around $700 new, I got well over $200 for it. The net cost was under $500. Android phones might be cheaper, but you can't really sell them when you're done with them because there's always newer Android phones that are also inexpensive.
The same effect happens with Apple's desktops and laptops...by not offering a bargain basement tier, they foster a thriving resale market that's reliable enough that you can factor it into the price when buying a new device. Apple is essentially charging for both the primary sale and the secondary sale up front. Once you account for that, a lot of the difference in price between them and their competition goes away.
Yes they are "second tier" phones. The world is buying 2nd tier phones and even the average selling price for Samsung phones is around $182 (http://www.businessinsider.com/apple-and-samsung-sell-phones...). In the grand scheme of things, an insignificant number of people are buying high end Android phones.
When I sold my 3-yr old iPhone, which cost around $700 new, I got well over $200 for it. The net cost was under $500. Android phones might be cheaper, but you can't really sell them when you're done with them because there's always newer Android phones that are also inexpensive.
The same effect happens with Apple's desktops and laptops...by not offering a bargain basement tier, they foster a thriving resale market that's reliable enough that you can factor it into the price when buying a new device. Apple is essentially charging for both the primary sale and the secondary sale up front. Once you account for that, a lot of the difference in price between them and their competition goes away.