They're repeating the mistake Nokia did after the Lumia 520. They had an awesome value phone and now they're squandering the progress they made by putting out a side-grade while the competition continues to improve and erode their value advantage.
The 550 and 650 shouldn't exist together in the first place. The 535 was already a 5" phone, The soon to be 650 should've been the 550, and that's all they should have released as a low end 'small' phone (they should have then also had a 550XL as a budget phablet). I'd wager if they only made the '650' model, the savings (no R&D for the second model, no separate logistics and marketing involved, etc.) would have offset the lower profit margin of selling a slightly better spec'ed phone at the cheaper price. As it is the only difference between 550 and 650 is 0.3" of screen size and slightly better cameras. Makes no sense at all.