Hmmm... maybe in emerging markets it might do well. I'm more wondering about the change in image in the long-term. Apple have been marketing their products as premium quality. If they start moving into lower markets then that image is going to change, but I'm not sure they'll be able to balance their premium budget market segments.

Considering the high price of the iPhone in Brazil, isn't it likely they'll still price the budget phone quite high, just slightly cheaper then the preimum iPhone?

The S4 might overtake the iPhone 5 at launch, but it will only be for a short time like the S3 vs 4S.

It'll be hard for them to overtake Apple in profit though as the iPhone takes over 70% of the profit of the entire smartphone industry.

the OP is asking just the galaxy exclusively not including the cheapy ones

You got it for $50 and it doesn't work, the obvious question is were did you get it? If you already said somewhere and I didn't read it properly I apologize in advance.

Yeah, I thought the same thing when I read about this lower cost Iphone. I agree with people who think that the current Apple management doesn't know what direction to take the company. Like, they aren't innovating much anymore and are just carrying on and playing safe with their products. Right now they are living off their brand, but soon people who had Iphones will switch to Android and even Windows soon or a later since those phones are looking more impressive and Apple may find itself introuble again.  

Also, I'm not sure how they will price their budget phone  to make it cheaper. Perhaps they will start production of the phone in countries like Brazil to make the phone cheaper? 

The local Sprint (my provider) store. That is where I have purchased every phone I have owned.

As I understand it, the big issue with the Brazilian market is enormous tariffs on imported consumer electronics.  It's reflected in the prices you quote. A $400 4S is actually cheaper than it sells in most markets (It costs $550 in US and Canada), so Apple must be assembling those in Brazil. The 5 is obviously so much more expensive because none of that SKU are being manufactured in Brazil (yet?).

Don't take the wishful analyst's word that Apple is making a cheaper iPhone. Apple has had great success so far in achieving strong phone growth while maintaining high average revenue per unit. While a cheaper iPhone could create more growth opportunities, especially in developing markets, it also threatens those high-margin sales and the high-value customers that have made iOS the dominant mobile platform. Apple may be perfectly happy, and more profitbale in the long-term, taking the most valuable 25% of the phone market and leaving the rest to low-margin white box manufacturers.