Rumors of a lower cost iPhone have been out there since at least a year ago. They have become more and more widespread over the past few months and now the possibility of a lower cost iPhone being announced along with the iPhone 5S are quite high. Watch the video below for a look at what the lower cost iPhone (iPhone Lite?) could look like.
Although the possibility of a lower cost iPhone is increasing, I personally don't see much of a reason for it. For a lower cost iPhone in emerging markets people could simply buy the older iPhones as opposed to the latest iPhone. That'll save them money. Unless Apple will sell the lower cost iPhone at a dramatically lower price, which could reduce the iPhone 5 sales.
I know that the older iPhones are not as fast or as good as the latest iPhone, but neither will the low cost iPhone if we ever see one. It's interesting to see what features Apple will include in the lower cost iPhone if they ever make one.
Another problem is that a lower cost iPhone will take away from Apple's successful premium brand image.
Having said that, it is certainly possible that Apple releases the lower cost iPhone for reasons I'm not aware of. If you know any good reason for why a lower cost iPhone should be released please share it in the comments as currently I don't see much of a good reason for it.