Nah, I much rather have a product that can compete in every single smartphone category that still has Apple's design and production values but with more competitive prices to drive profits on all levels, not just in the luxury market.
You cannot reasonably chase every market. There isn't a successful business that does this. Why don't we refrain from ideals and focus instead on actual strategy? Ideally, every company would like a strong product in every market. Apple's design and production values come at a cost. They could potentially leverage past R&D for devices to bring down the cost of building lower end devices, but these still wouldn't be as cheap as you'd like to believe.
Putting all the eggs in one basket is not something I'd want. Apple KNOWS putting all the eggs in one basket isn't exactly their main goal. They've tried to go into the 7 inch tablet space and the relatively cheaper phone with the 4s and the 5c. They know what's at stake here. But in China and developing markets, their efforts are continually being thwarted. Very soon, the biggest markets in the world won't be Apple friendly, they will be customers Apple won't likely have. And that means less potential for profit growth. But all of that doesn't matter because Apple prices these phones for the high end, and essentially the postpaid world. Eventually that postpaid world is going to have more competitors.
Again, let's remain with the real world. At what point in time has the iPhone ever been the only egg Apple has? When you ignore most of the picture, the point you make is valid. But, it no longer matters. It's like teaching high school physics students how a car stops in a world without friction.