Apple iPhone 3GS to be free on contract following iPhone 5 launch, analyst says

By Zach Epstein on Jun 29, 2011 at 10:11 AM

Apple is set to finally hit the $0 on-contract mark with its entry-level iPhone 3GS once it launches the next-generation iPhone 5 later this year. In a note to investors on Wednesday, RBC Capital Markets General Manager Mike Abramsky claims Apple is expected to finally offer the phone for free in an effort to aggressively attack mid-market smartphone buyers and counter Android’s momentum. Abramsky sees this move more than doubling Apple’s global addressable market to 150 million smartphones, up from 64 million, and it will drastically accelerate Apple’s growth outside North America. In the U.S., this of course begs the question, how will Verizon Wireless stay competitive with AT&T? Apple does not currently offer a CDMA iPhone 3GS, so the carrier would be unable to match AT&T with mid-market customers. Add to that AT&T’s attractive $15 data plan option versus Verizon’s minimum $30 plan, and subscribers looking for an iPhone on a budget will really only have one place to look. Abramsky currently has an Outperform rating on Apple stock with a price target of $450.

Tags:: $399, Android, Apple, AT&T, Free, Free iPhone 3GS, iPhone, iPhone 3GS, iPhone 5, Launch, Launch Date, Release, Release Date, Verizon, Verizon Wireless, VZW

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Anonymous

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Bringit

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I have just summed up this entire site.

Anonymous

Troll. Summed up your entire post.
Bringit

We know you are.
Anonymous

You win, I’m busted.
Anonymous

@c009b00976ca25649d53f2a08121b9f1:disqus Wait, you’re the kid I saw posting the words “Apple” and “Freedom” in the same sentence, You’re funny as hell.
Bringit

@Omnifire:disqus Wait, you’re the kid we saw posting “Android” and “Quality” in the same sentence. You’re funny as hell.
Michael Scrip

Back on topic….

Apple would not give a phone a away for free.

Also… Apple has nothing to do with the contracts.

So… it sounds like the carrier will be subsidizing the entire cost of the phone. But, they do that all the time.

Isn’t the iPhone free on some carriers around the world already?
Anonymous

@c009b00976ca25649d53f2a08121b9f1:disqus At least we both agree we’re hilarious.
Tim242

Crotch crickets Crotch crickets Crotch crickets Crotch crickets Crotch crickets Crotch crickets Crotch crickets Crotch crickets Crotch crickets Crotch crickets. I just summed you up.

Anonymous

Analyst have analyzed this to be an astute analysis.
Anonymous

should have had it “analyst says..”

Slash182

Oh, they still produce the 3GS?

Bullyboyb

Over produced, apple signed huge production contracts for the 3GS and iphone 4. These will still be sold next year.

Kapono

The 3GS is still an awesome phone, and getting it for free is a great offer. My question is… how much will they bring the price of the iPhone 4 down?

Anonymous

Will iOS 5 run on a 3GS?

Edit: Found my own answer…

http://www.apple.com/ios/ios5/features.html

Yes, 3GS will run iOS5

Anonymous

Yesturday you guys said there was no iphone 5 coming out… its gonna be an iphone 4S…. is the story changing now based on analists? (yea i spelled it wrong)

http://twitter.com/cdoruff Collin Doruff

BGR has been posting any and every hint of anything Apple regardless of what analyst says what. They should have specific tabs on the homepage for “iPhone 5 believers” and “iPhone 4GS believers” and people can choose what speculation they want to read.

Anonymous

Yeah and when you sign a contract you should buy the most future proof one… you will pay the same monthly bill for the two year old 3GS as the 5 or 4S
http://www.droiddoes.com/ iNorm

LOL. Free??? Who do they think they are? DROID?!? You don’t have to give away something that people actually want.

its me!

“You don’t have to give away something that people actually want.”

Exactly. =)

Eric Walker

Unless they can’t afford it, or it’s parents that don’t want to buy their kids expensive phones.

frank

This is so stupid. “free on contract.” Nothing is free “on contract”. You pay for it in terms of monthly fees to the cellular companies. It’s called subsidies….stupid analysts. Why would any one want to be on contract with a 2 year old iPhone 3GS. Now if they offered an iPhone 4 for “free on a new 2 year contract”. That’s something one may consider.

http://twitter.com/cdoruff Collin Doruff

Right. Youre still paying for it from the carriers. Only difference is carriers are making a little less money, Apple is making the same amount, and in the end, likely MORE from selling buttloads of 3GS.

The Plus side is, people will have something cheep to get (on contract renewal) if something happens to their iPhone 4 or 5.

Downside is…it wont be “free” off contract.

http://twitter.com/WhyCantMyPhone Neal Elward

Well, no, the price to the carriers will go down too.

This is ridiculous, though. The 3GS was underspec’d when it launched two years ago. The thought of committing to a contract for something so dated is appalling. Of course when it is represented as “free”, the suckers will flock to it. I appreciate that there is much more to a phone/platform than specs, but specs do matter and it is going to be harder and harder to run current apps on a 3GS as that new two year contract plays out.

Anonymous

That’s a pretty good guess.

I’d like to submit opinions (and guesses) for your site’s article submissions. My fee is only 5% of the ad revenue and/or some free scwag.

Here is a freebie – Apple’s new iMessage will allow many users to drop texting plans thus pushing carriers to adopt more aggressive combo plans like AT&T’s recent Unlimited Mobile To Any Mobile plan that is tied to qualified unlimited texting plans.
Anonymous

If they did offer a free 3GS and still offered the 4 cheaper then the next version, that would be hard to compete with, at least on Att. Apple needs to release a device on Sprint & Tmo, taking way too long.
Anonymous

The phone will be over 2 years old, it should be free. It’s still a bad value when you consider that you will be locked into a 2 year agreement that will cost you upwards of $2,000 over its life (in the US at least) with a phone that is already very dated and will look absolutely ancient in the latter year of the contract. People make the mistake of thinking its $0 vs. $200, when its really something closer to $2,200 vs. $2,400. Saving less than 10% gets you comparatively much worse devices for the next 2 years. (Bear in mind this analysis only applies to iphones in the US.)

Anonymous

I attempted to talk some co-workers out of buying 3GS ($50) and instead getting the 4 and while they can easily afford the $150, they just wanted an iPhone and didn’t want to pay the extra cost. They probably wouldn’t notice the differences anyways, beyond the physical appearance. Some people just want to save a few bucks and don’t care about the latest and greatest. Android is doing so well because of this.

Paul H

If Apple is really going to do this, I wonder if they’d produce a CDMA 3GS for Verizon.
Anonymous

This guys an idiot. Apple isn’t going to offer ANYTHING for free. At best they would drop the price to $500. This way the carriers can subsidize the entire cost of the phone. Ever wonder why u get the $700 iPhone4 for $199 with contract??? Uhhh DUHHHHH. I’m still betting on an NEW 300-$400 phone whether it resembles the 3G(S) or not who knows but I’m betting the specs will be lower. Anyways… APPLE WILL RULE THE WORLD! True story™®©

http://twitter.com/cdoruff Collin Doruff

But Apple isnt the one setting the price the carriers sell it for. Apple sells it for X ammount of money to AT&T, and AT&T sells it for what they want it for. If it’s free, then they make money back through contracts. Apple makes money regardless with every “free” phone, because AT&T buys it from them. I bet we wont see “free” iPhone 3GS from the apple store, or i’d go pick up a few dozen and sell them myself lol

Biggles

Anything Apple is price fixed. If the price was slashed in any way, shape, or form, permission came from Cupertino. The only thing that gets you a cheap iPhone from an authorized seller is if it’s obsolete twice over. That being said, the 3GS free on contract is still overpriced.
Michael Scrip

— ” the 3GS free on contract is still overpriced.”

I dunno…. have you seen the other “free” phones out there?

The 3GS would still run smoother than an LG Vortex…

Bringit

And the universe.

Alvin A. Smith

There’s no way Apple will do this. They would be more likely to offer the iPhone 4 for $49 or $99, because frankly, those price points are *practically* free for a lot of consumers.

The 3GS is too long in the tooth. It was not able to adopt key features in iOS 4 and I imagine the same will go for iOS 5.
Banofbros

I hear R.I.M. is offering free Storm1 phones, with no contract.
Anonymous

Free is too much for any Apple product… That’s how bad they ALL are… I see them at the Apple store (from the window of course, we can’t go in per our bi-laws) and they look cheap and horrible…

Eric Walker

I hope you dream of Apple products

http://profiles.google.com/impheatus Eduardo Sandoval

It’s already free here in Mexico.
Steve Lee

What ever they said aint shit. They just analyze stuff.
Anonymous

I really wish BGR would not post analyst opinions as facts. They’re not facts.
zacamandapio

Apple Analyst claim number 5325.
http://twitter.com/iphoneication r(d)apps

i believe that apple will keep the 3gs as its low end model. I also think that apple will use the 3gs in its new strategy to go into the prepaid market. soon apple will have 3 handsets on the market, with a 4th on the way in 2012. it is my belief that 3gs will be free with contract, or buy unlocked for 299. on prepaid. this will allow apple to gain market share. if any of you can recall, 4th quarter earnings call, COOK COO said that they have some interesting things in regard to the prepaid market. and i believe the 3gs will be that phone. i also think that the 4s will gain tmobile and sprint…..qualcoms dual band chip is already in verizon model phones,, this will allow apple to produce one handset instead of different models for each carrier. so this kind of ties into my feeling of the 3gs prepaid, if it has a dual band chip in it,, why wouldnt it make a great unlocked/prepaid option?
Anonymous

I’m not sure about you people but I’m getting sick of these analysts.
http://twitter.com/taupecat Tracy Rotton

Dear Analyst & BGR:

Apple will get rid of the 3Gs when the iPhone Next debuts.

Apple won’t have *three* versions of one product available for obtainment, and surely iOS5 will mark the phase-out of support for existing 3Gses in the wild (as iOS4 did for 3Gees (how *do* you plural “iPhone 3G,” anyway?).

Please stop reporting analysts’ wish lists to Santa Claus as “FACT: THIS IS WHAT APPLE WILL DO” because they ain’t.
Eric Walker

So Apple is still making these? I thought they just made way too many of them.

I think I found my wife an upgrade for her 3G lol.
Joe Butler

First off I think Verizon will be fine. The iPhone 3GS is very outdated by todays smartphone standards, (Even for an iPhone). And the comment about the $15 dollar data pack option being “Attractive” and how is Verizon going to compete is an absolute joke. The $15 data package is a trap plan. Recent studies have proved that the average smartphone consumer (Particularly on Androids and iPhones) uses on average over 430 MB’s of data monthly. That’s more than twice the 200MB allowance AT&T’s $15 data pack offers. The average consumer would end up paying $30-$45 due to overages monthly using the $15 data pack on their iPhone. That data pack is basically for Blackberry Users who a good chunk of their users might actually be able to get by on 200 MB’s or less.
http://profiles.yahoo.com/u/VCBEBTYM2XLKT7WBH4OWJ5QUZ4 commonsenseplease

Wait…don’t apple lovers continually harp on “android’s are so cheap or they’re just given away in BOGO offers”.
So apple is looking to ACTUALLY give away phones to increase their market share??
AHAHAHAHAHHAHAHAAHHAHA

Apple iPhone 3GS to be free on contract following iPhone 5 launch, analyst says

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