Apple would do well focusing its energy and resources on premium handsets like the iPhone 6 and iPhone 5S and would be in a much safer state ditching the so-called iPhone Lite, a new report said.

The tech giant is in great danger of courting "significant quality dilution," on apparent plans of expanding its presence beyond its traditional stronghold in the upscale market arena, according to UBS analyst Steve Milunovich.

Playing in the emerging market field is fraught with great risk, as far as Apple's conventional business model is concerned, BGR News reported Mr Milunovich as saying in a new research note.

While he noted that there were valid clamours for the iPhone maker to widen its product lines and cater to different market segments outside of its lucrative turfs, Apple needs to thread the line with utmost care, the analyst warned.

"Short-term gain could result in long-term pain," he declared.

Mr Milunovich added that in reading between the lines the recent pronouncements made by Apple big boss Tim Cook, it was evident that the company was apprehensive of its upcoming that lead to the release of a low-cost iPhone model.

"(Apple) management is very aware of the risk as reflected by Tim Cook's comment that Apple is about making the best products rather than the most," the analyst wrote.

The best option for Apple, he added, is to build a budget smartphone that bears a different brand or the company is best-served in dumping the project altogether.

The iPhone Lite, anyway, will not come as the cheaper iPhone, Mr Milunovich stressed. In order to protect its profit margins and its brand value, Apple will have to price the budget phone between $350 and $400, which for many is not really cheap.

The best bet for Apple, at the moment and in light of growing competition mostly coming from Samsung, is to focus in bringing the killer features that will come via the successive releases of the iPhone 5S and iPhone 6.

Recall that some analysts even projected earlier this year that Apple will likely cancel the 5S, regarded as a slight update from the iPhone 5, and push out instead the iPhone 6, which is rumoured as the company's first phablet model bearing a screen size between 5.7-inch and 6-inch.

Regardless of the swirling rumours and projections, the iPhone 5S is currently pegged for a September 2013 debut while the iPhone 6 is set for a Q1 2014 release date.