Originally posted by gazonk K100D was the intermediate model - the budget model was K110D. I guess they had a 2-camera lineup (K200D + K20D) for a very short time (when was the K100D Super discontinued?) before the K-m was introduced?
No that's not the case. The only difference between the K100D and the K110D was that the K110D lacked SR and had a different coloured mode dial. Both were entry-level cameras. The K100D was the first Pentax camera to offer Shake Reduction and I believe the old conservative Pentax folks (pre-Hoya) were unsure if consumers would pay the slight difference in price to get SR, hence the cheaper K110D as a fall back alternative. Once SR was demonstrably proven and consumers opted for the K100D, the K110D was quickly discontinued.
I would argue the K200D was also discontinued because it failed to sell in numbers. While it had a decent feature set, straddling between the entry and enthusiast models, it was too much camera for the first time buyer but too little camera for the serious enthusiast.
Companies that churn out too many models in quick succession risk buyer confusion as there is little to distinguish one model from the other. The plethora of models from Sony, Canon and Nikon is in my mind a desperate attempt to hone in on a sweet spot market segment or to cover all bases to enlarge market share. Even though these companies may have the production capacity to quickly churn out a new model, I personally believe such a strategy works against them in the long run.