Apple's rumoured low-cost iPhone, planned for a simultaneous release date with the iPhone 5S, will redefine the smartphone industry in the same way that the iPad Mini altered the global tablet arena, a new report said.

An iPhone that sells between $US350 and $US400 will come as a game changer, according to J.P. Morgan analyst Mark Moskowitz, likely disturbing the prevailing competition environment among mobile phone makers.

Per Barron's report, the entry of an affordable iPhone will decimate many low-end brands and further establish the ongoing smartphone war between Apple and Samsung, said the new J.P, Morgan note.

The analysis also pointed out that in terms of pricing, the low-cost iPhone will actually cater to the mid-range market but Apple's branding might alone would attract more buyers even in the price-sensitive segments.

The note pointed to the iPad Mini model. It debuted last year with what critics had characterised as underwhelming specs and relatively high price tag compared to more powerful and cheaper Android rivals.

Still, the Mini raced to the top of the tablet food chain, outstripping even the sales performance of the 9.7-inch iPad, which prior to the iPad Mini's introduction reigned for a number of years as the undisputed tablet king.

What transpired, Mr Moskowitz said, only proved that "Apple usually creates new demand when it steps into a price band."

"After the launch of iPad Mini, this (small tablet) segment has become one of the largest parts of the market, even convincing many users to upgrade from cheaper tablets to the iPad Mini," he further explained.

Despite the bright prospect from analysts, Apple appears tentative on the actual market promise of the cheaper iPhone.

According to DigiTimes, the tech giant is deliberately opting for a limited release of the budget iPhone later this year. The likelihood is, Apple will only manufacture an initial shipment batch that numbers between 2.5 million and three million, the same report said.

The move is meant to test the waters - how the consumers, especially in the emerging markets, will respond to an Apple branded smartphone that carries the same prestigious name but will less power and capabilities.

Rumours have suggested that the cheaper iPhone is on polycarbonate casing and will sport a 4-inch screen display. The handset will draw its power from an A6 computing chip.

Analysts believed that Apple plans to release the budget iPhone with the iPhone 5S by September or October this year.