Apple to Offer Free iPhone 3GS With 2-Year Mobile Contract

According to recent reports, Apple may offer the iPhone 3GS as a free phone with a two year service contract.
Analyst Mike Abramsky with RBC Capital Market stated that Apple might be releasing the free iPhone 3GS with service contract when the iPhone 5 releases later this year.

He said that this strategy will help Apple to target mid-market buyers and also counter the growth of Google’s Android.

“While a $49 iPhone is already available (AT&T), psychologically a $0 iPhone provides a compelling offer,” Abramsky wrote in a note to investors. “Proprietary survey data… suggests 14% are very/somewhat likely to buy the iPhone 3GS for free with 2-year contract, exceeding buying interest for the iPad (13%) and original iPhone (9%).”

He expects that by offering free iPhone 3GS, Apple actually will double is potential market to more than 150 million smartphones and also increase the global share of iPhone.

As you may already know that Apple has a history of discontinuing the old models and offering iPhone 3GS would be a change. For instance, when iPhone 4 was launched last year, the iPhone 3G was discontinued and iPhone 3GS priced was decreased to $99. In the start of 2011, the price futher decreased and iPhone 3GS was offered at $49 in the US. The device carries an 8GB capacity, half that of the entry-level 16GB iPhone 4, which sells for $199 with a new two-year contract.

Though iPhone 3GS is now an old model but will be compatible with the upcoming iOS 5. iOS 5 beta versions are already released and full version is expected to be released this fall.

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