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.
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.
![Apple Pulls Keynote, Pages and Numbers From App Store [Update: Back]](https://images.macrumors.com/t/Okb7kitB_gNr6qe5Pex9nQIysD8=/112x112/article-new/2026/01/Apple-Creator-Studio-iWork-suite.jpg)
Top Rated Comments
Back to the article ... why would they keep the 3GS? It's going to be 2 generations behind...
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.
i can already get the iPhone 4 for free with a 2 year contract
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 :)
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).
I expect Apple to stick to their previous-model and latest-model strategy and not complicate things any more than needed.
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.