Based on that comment, you have no idea what a downmarket customer is (even in the US). They aren't people who get phones "free" on contract. Downmarket customers don't have contracts. Sometimes they can't afford the guaranteed monthly expense. Often no one will give them a contract, usually because of poor credit. They're the ones who appreciate $99 or cheaper smartphones because, as limited and out-of-date as they are, they're still a big step up from the feature phones they were getting.
Yeah, I don't see Apple selling as far downmarket as, say, Tracfone. But they'll capture the midrange to low end of the contract market which is downmarket from where they were before.