With Apple releasing multiple new iPhones (a cheaper iPhone 4, iPhone 4S, and iPhone 5), many were wondering what would happen to the 3GS. The price was obviously expected to go down but the real question was whether or not Apple would be keeping the iPhone 3GS around, even after the next iPhone hardware update. RBC Capital Markets analyst Mike Abramsky weighs in to report that he believes that Apple will be keeping the iPhone 3GS around and that the company will be offering the device free of charge with a two-year contract and at a $399 for unsubsidized purchases. The $399 unsubsidized purchase price point is currently being debated and some are arguing that Apple might try to come in at $349 instead.
As of right now, Apple is currently selling the 8GB iPhone 3GS for $49 with a two year contract and $449 unsubsidized. The changes to be made after tomorrow’s announcement drastically affect the company’s entry-level iPhone strategy. The approach the Apple seems to be taking by cutting he iPhone 3GS to $0 is intended to target mid-market smartphone buyers with the intentions of countering its competitors’ (more specifically Android, but not entirely) mid-market expansion.
Apple was previously mentioned to be in the middle of working on a smaller iPhone form factor that could allow the company to offer the device for as little as $200 unsubsidized. Abramsky believes that the new “baby iPhone” won’t be released until sometime next year, which would give the new device a chance to take advantage of a fully functional iCloud service that Apple will be trying to push in the meantime. This makes sense since refining iCloud would help market the new device itself and make possibly customers feel a bit more secure when buying a lower-end device.
Source: MacRumors
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