Can Apple's New iPhone Answer Margin Calls?

NEW YORK ( TheStreet) -- Apple's ( AAPL) long-awaited "Sept. 10 event" is finally here!

Although the company hasn't officially confirmed the agenda for this affair, it is broadly expected that (among other things) Apple will unveil the new version of its iPhone -- presumably called the 5S.

But wait, there's more!

To compete more effectively with Samsung's ( SSNLF) hardware and attack Google's ( GOOG) Android dominance, a cheaper version of the iPhone, called the iPhone 5C, is also expected to be revealed.

Now, I've always had mixed feelings about this. It's not because I doubt management's ability. Nor am I suggesting that Apple won't turn the iPhone 5C into a ranging success.

Aside from this being "unchartered territory" for Apple, I just haven't seen where management has communicated what the long-term strategy is. You see, Apple's ability to think light-years ahead of the competition has never come into question. That is, until recently. But the Street's reaction to Apple's lack of innovation has been overblown.

Still, I've developed some mixed feelings about the cheaper iPhone. Apple's always been known as a leader. And as an Apple shareholder, I can appreciate that Samsung has done well for itself in the low-end handset category. In fact, this market has catapulted Samsung to the worldwide leader in device sales.

But even with Samsung dominating hardware, it is Apple that's been money in the bank, amassing $150 billion in cash. So, entering the budget category seems reactionary, or playing from behind. It's un-Apple-like.

Essentially, Apple's business model and the company's mission has worked to perfection -- even if it meant what the critics described as "elitist" or "deliberately ignoring some markets." Yet, during that span, what Apple has been able to accomplish has been nothing short of remarkable. So it gives me pause to think that Apple is now a company in transition.

A "budget" iPhone serves as evidence of this changeover. But at what cost?

I say this because, one of the most popular cited bear argument against Apple, aside from its perceived lack of innovation, continues to be the company's compressing margins. It's as if $150 billion suddenly didn't matter.

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