Apple to Offer iPhone 3GS Free on Contract

Some analysts predict that Apple could keep its iPhone 3GS longer than predicted. The company might, probably, offer their handset for free on contract. As far as we know, the two-year old iPhone 3GS still remains the second best-selling smartphone in the United States of America. The first place belongs to the iPhone 4. Such situation only confirms suggestions that cost of a device is the key factor in customers' purchasing decisions.

Yesterday Mike Abramsky, analyst at RBC Capital Markets, issued a new research note where he told us about his expectations for the today’s iPhone event. Many of his predictions are in line with recent rumors we’ve heard -  HSPA+ iPhone 4S or 5 based on an A5 chip – he also believes that Apple keeps offering iPhone 3GS alongside the new smartphone(s).

We expect Apple to reduce the price of the prior iPhone 4 to $99 subsidized ($499 unsubsidized) and the iPhone 3GS to $0 subsidized ($399 unsubsidized, see 11/06/29 note for more detail and rationale); the prior iPhone 4 may be available only with 8GB memory.