Apple is reportedly working on a lower-cost iPhone as a way to combat some of the lost market share.

Pricing on the cheaper iPhone is still undetermined, with some analysts believing it could be as low as $329, unsubsidized. The average selling price (ASP) for the iPhone in Apple's fiscal third quarter fell below $600 to $581, further fueling speculation of a low-end phone.

In the past, Cook has said that China is incredibly important to Apple, so those results are obviously troubling to him, and a visit to China may have been caused by the troublesome numbers. He reiterated on the earnings call that China is incredibly important to Apple, despite the troublesome numbers from the most recent quarter. "And so I continue to believe that in the arc of time here, China is a huge opportunity for Apple and I don't get discouraged over a 90-day cycle that can have economic factors and other things in it," he said.

Apple is attacking China head on, and Cook's visit to the country is indicative of that. The tech titan plans to double the number of retail stores in China over the next two years, as well as raise the number of iPhone and iPad points of sales, which Cook noted are lower than Apple would like.

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-- Written by Chris Ciaccia in New York

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