With talk of Apple seeking to release a cheaper iPhone being revived in recent days, RBC Capital Markets analyst Mike Abramsky now weighs in to report that he believes that Apple will be keeping the iPhone 3GS around even after the next iPhone hardware update, offering the device for free with a two-year contract and at $399 for unsubsidized purchases. Apple currently sells an 8 GB iPhone 3GS for $49 on a two-year contract and $449 unsubsidized.

As its entry-level iPhone strategy, Apple is expected to cut iPhone 3GS to $0 (on contract, $399 unsubsidized) in conjunction with iPhone 5 launch (we continue to expect it in September). This approach is intended to target mid-market smartphone buyers and counter Android's mid-market expansion. We expect iPhone 5 to launch at $199/$299 ($599/$699 unsubsidized), and Apple to drop iPhone 4 pricing to $99 ($499 unsubsidized).

The claimed $399 price point for the unsubsidized iPhone 3GS is a bit higher than other reports have been hinting at, with the analyst report from earlier this week suggesting that Apple would try to come in at $349 for its cheaper iPhone.

iphone 3gs oblique
Earlier reports had claimed that Apple was working on a smaller iPhone form factor that could allow the company to offer the device for as little as $200 unsubsidized. But while some rumblings of a new, smaller iPhone option for this year continue to float around, Abramsky believes that the "baby iPhone" will not be released until 2012, in part to fully take advantage of iCloud leverage that may not be possible as the service debuts.

Related Forum: iPhone

Top Rated Comments

wordoflife Avatar
135 months ago
Source? Link?
In Europe, mainly countries like the UK (and even Canada ... yes I am aware that is not in Europe) get the iPhone 4 for dirt cheap or even free provided you sign a contract. Carriers in the US are very greedy.

Back to the article ... why would they keep the 3GS? It's going to be 2 generations behind...
Score: 6 Votes (Like | Disagree)
MonkeySee.... Avatar
135 months ago
Really? Is anyone going to get a phone that is soon to be 3 generations old?

My 3GS is getting tired and i'm sure iOS 5 isn't going to help. I can't wait to palm it off on the sister-in-law.
Score: 5 Votes (Like | Disagree)
bushido Avatar
135 months ago
lol america

i can already get the iPhone 4 for free with a 2 year contract
Score: 4 Votes (Like | Disagree)
Cloudsurfer Avatar
135 months ago
If we're living in the past, then you must see no value in the internet, or Macrumors for that matter. Very little innovation comes out of Europe anymore. If you don't see that, you're just ignorant. Apple, Intel, AMD, Microsoft (when the copier isn't running), and Google (them too) are the main sources of innovation, at least in the tech world, and they're all American-based. Europe needs to get its act together. You guys lost John Ive all those many years ago, and for good reason.

Europe has BMW, Mercedes-Benz, Ford (the European branch), Fiat, Renault, Citroen, Peugeot, Volkswagen, Ducati, KTM, Suzuki (European branch), Triumph, Airbus...

Europe is the biggest vehicle export region in the world. Most vehicle innovation in terms of tech and fuel economy originates in Europe. If you think America is the only innovative country left, you're.. well, to backfire just ignorant.

Fact of the matter is that Europe has a very different mobile phone culture than America, in part due more competition that drives companies to lower their prices. For the past decade, phones have been free or very cheap with contracts where I live. And you might not like to hear this, but that has had a significant contribution to the success of iPhone. Thanks to us humble Europeans :)
Score: 3 Votes (Like | Disagree)
longofest Avatar
135 months ago
Really? Is anyone going to get a phone that is soon to be 3 generations old?

My 3GS is getting tired and i'm sure iOS 5 isn't going to help. I can't wait to palm it off on the sister-in-law.

There are a bunch of costs associated with having so many different product lines going at the same time. You'd either have to tool up another assembly line to do the model, or do a production run of your lowest expected volume model and then retool and switch models, which would leave inventory lying around, and we know how much Tim Cook likes inventory (http://money.cnn.com/2009/01/15/technology/cook_apple.fortune/index.htm).

Inventory, Cook has said, is "fundamentally evil," and he has been known to observe that it declines in value by 1% to 2% a week in normal times, faster in tough times like the present.

I expect Apple to stick to their previous-model and latest-model strategy and not complicate things any more than needed.
Score: 3 Votes (Like | Disagree)
Ugg Avatar
135 months ago
Americans are getting ripped off so bad.

I can see keeping the 3GS for emerging markets, but I would prefer a stripped down version of current tech, rather than something that is 3 years old. If this report is true, it looks like I still won't be buying an iPhone and will have to make do with my Android.
Score: 3 Votes (Like | Disagree)

Related Stories

studio buds family

Beats Studio Buds Debuting Today With Active Noise Cancellation, Stemless Design, and More for $150

Monday June 14, 2021 8:00 am PDT by
We've seen a lot of teasers about the Beats Studio Buds over the past month since they first showed up in Apple's beta software updates, and today they're finally official. The Beats Studio Buds are available to order today in red, white, and black ahead of a June 24 ship date, and they're priced at $149.99. The Studio Buds are the first Beats-branded earbuds to truly compete with AirPods...
airtag in hand

Apple Enhancing AirTags Anti-Stalking Measures With Android App and Shorter Sound Intervals

Thursday June 3, 2021 11:10 am PDT by
Apple is enhancing AirTags security to prevent stalking using the Bluetooth devices, Apple told CNET today. Apple is already sending out over-the-air updates to AirTags that will shorten the amount of time before an unknown AirTag alerts you if it is in your possession. At the current time, AirTags play a sound after three days of being away from their owner. After the update, AirTags will...
maxresdefault

Here's How Apple's New iPhone to iPhone Data Migration Feature Works in iOS 12.4

Tuesday July 23, 2019 1:20 pm PDT by
Apple this week released iOS 12.4, the newest version of iOS 12 available for iPhones and iPads. One of the new features in iOS 12.4 is an updated data migration option that uses device to device transfers rather than relying on iCloud. Apple didn't provide much information on the new data migration feature, so we thought we'd check it out in our latest YouTube video. Subscribe to the ...
youtube apple tv

YouTube Discontinuing 3rd-Generation Apple TV App, AirPlay Still Available

Wednesday February 3, 2021 3:09 pm PST by
YouTube is planning to stop supporting its YouTube app on the third-generation Apple TV models, where YouTube has long been available as a channel option. A 9to5Mac reader received a message about the upcoming app discontinuation, which is set to take place in March.Starting early March, the YouTube app will no longer be available on Apple TV (3rd generation). You can still watch YouTube on...
macos catalina legacy system extension alert

Apple Begins Warning Users That 'Legacy System Extensions' Won't Work With a Future Version of macOS

Wednesday March 25, 2020 9:53 am PDT by
Apple has shared a new support document that indicates kernel extensions — which it calls "legacy system extensions" — will not be compatible with a future version of macOS because they "aren't as secure or reliable as modern alternatives."System extensions are a category of software that works in the background to extend the functionality of your Mac. Some apps install kernel extensions, which...
os x mountain lion macs 16x9 2

Apple Makes OS X Lion and Mountain Lion Free to Download

Wednesday June 30, 2021 12:19 pm PDT by
Apple recently dropped the $19.99 fee for OS X Lion and Mountain Lion, making the older Mac updates free to download, reports Macworld. Apple has kept OS X 10.7 Lion and OS X 10.8 Mountain Lion available for customers who have machines limited to the older software, but until recently, Apple was charging $19.99 to get download codes for the updates. As of last week, these updates no...
airtag precision finding

AirTag Includes U1 Chip for 'Precision Finding' Feature

Tuesday April 20, 2021 12:11 pm PDT by
Apple's long-awaited AirTag was finally unveiled today, and as expected, the small circle-shaped accessories can be attached to items like wallets, keys, and more to allow them to be tracked in the Find My app. As was rumored ahead of release, each AirTag is equipped with a U1 chip, and on devices that also have U1 chips, there's a Precision Finding feature. U1 Ultra Wideband chips are...
iOS 15 General Feature Yellow

Everything New in iOS 15 Beta 6: SharePlay Disabled, Safari Redesigned and More

Tuesday August 17, 2021 2:12 pm PDT by
Apple released the sixth beta of iOS 15 just a week after the fifth beta, but the new update brings some of the most significant tweaks that we've seen to iOS 15 during the beta testing period. Safari Redesign Apple in iOS 15 beta 6 has added a toggle to move the Safari address bar to the top of the interface, which returns Safari to an iOS 14-like design and mitigates all of the Safari...
m1 macbook air

Kuo: Mini-LED MacBook Air Coming in Mid-2022

Thursday July 22, 2021 7:48 pm PDT by
Apple will release a new version of the MacBook Air around the middle of 2022, Apple analyst Ming-Chi Kuo said today in note to investors seen by MacRumors. The upcoming MacBook Air will feature a 13.3-inch mini-LED display, which would make it the second Mac to gain mini-LED technology after the 2021 MacBook Pro, which is rumored to include a mini-LED display and is expected to launch later ...
2016 macbook pro flexgate b

Apple Faces Another Class-Action MacBook Pro ‘Flexgate’ Lawsuit

Thursday August 20, 2020 6:43 am PDT by
Another class-action complaint has been lodged against Apple, which claims that the company was aware of a MacBook Pro design flaw that caused some devices to have backlight display issues (via Apple Insider). The so-called "flexgate" problem was present in some MacBook Pro models manufactured between 2016 and 2017. The problem appears as dark patches along the bottom of the MacBook Pro's...