The headlines were good. Apple reported fiscal third-quarter earnings and revenue that beat analyst forecasts. But, digging deeper, Apple's Achilles heel was plain for all to see: shrinking margins and slowing China sales.
Still, Apple's shares closed up 5 percent on Wednesday and many analysts dismissed the worries, pointing to signs the company is working on a cheaper iPhone that will help it better compete in emerging markets such as China and alleviate the margin pressures.
"There's a lot of speculation for this low cost iPhone that's coming, that potentially could be the majority of the fourth-quarter shipments," Steven Pelayo, regional head of technology research for Asia-Pacific at HSBC, told CNBC on Wednesday.
(Read More: Apple earnings beat,but revenue outlook is weak)
"They really do need to have a low-cost product… with a plastic case, instead of a metal one, [and] some other ways to save some cost there."
Apple has consistently hinted at several new product launches this Fall, and on Tuesday, CEO Tim Cook re-iterated that theme. "We are laser-focused and working hard on some amazing new products that we will introduce in the Fall and across 2014," Cook said.
Ian Fogg, head of mobile at research firm IHS Global Insight, told CNBC that Apple was weighing up lower price points in emerging markets to see how they affect shipments with an eye on future releases.
"This is a great bit of real world marketing research [going on]," Fogg said. "Does it cannibalize its higher end market or does it drive shipments? I think it will drive shipments."