Apple seen selling iPhone 3GS free with subsidy, $399 without contract

Posted:
in iPhone edited January 2014
Though the iPhone 3GS was first released in 2009, one analyst has said Apple will continue to sell its third-generation handset after the "iPhone 5" is announced, offering it for free with a service contract or for $399 unsubsidized.



Ahead of Tuesday's iPhone event, analyst Mike Abramsky with RBC Capital Markets said he expects Apple to introduce a refreshed iPhone this week, likely to be branded either "iPhone 5" or "iPhone 4S." He doesn't expect Apple to introduce a second, cheaper iPhone model, but instead reduce the prices of its existing lineup.



To that end, he sees the iPhone 4 dropping to $99 subsidized, and $499 without a service contract. But he also believes Apple will retain the iPhone 3GS in its lineup, offering it for free with a two-year carrier agreement, or $399 contract-free.



That would be a change from years past, as Apple has traditionally discontinued its two-year-old iPhone model. With the release of the iPhone 4 in 2010, the iPhone 3GS was dropped to $99 with a contract, and in January the price was further reduced to $49.



Industry-watchers have been forecasting for Apple to introduce a new entry-level iPhone for years, allowing the company address a huge global prepaid wireless market, particularly in China. That led to speculation that Apple would release two iPhone models this year -- one low-end offering, and a full-fledged fifth-generation handset.



But even prior to its note issued to investors on Monday, Abramsky has expressed skepticism about a new, low-cost iPhone from Apple. Back in August, the RBC analyst said the primary requirement for Apple to launch a low-end iPhone would be to provide an "innovative, category-killer experience."



The same analyst also said in June that Apple is "expected" to offer the iPhone 3GS for free once the iPhone 5 launches. He sees the approach helping Apple with mid-market buyers, and would counter the growth of Google's Android platform.







While the continued availability of the iPhone 3GS would be a surprise, the real focus of this week's event, scheduled to begin at 10 a.m. Pacific, 1 p.m. Eastern on Tuesday, is the new fifth-generation iPhone. Aligning with most rumors, Abramsky believes the new iPhone will feature the A5 processor, an 8-megapixel camera, support for high-speed HSPA+ networks, and a new high-end capacity of 64GB.



Abramsky said Apple may choose to brand HSPA+ as "4G," as U.S. carriers T-Mobile and AT&T have opted to do, even though it is not "true" 4G long-term evolution. He also believes the new iPhone will offer voice recognition technology stemming from the company's acquisition of Siri.
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Comments

  • Reply 1 of 78
    If people loved the 3GS wouldn't it still be a great phone? Is it so much slower that by comparison people wouldn't want it? What are the main differences between the 3GS and what will be the iP5? Is there software that works on the iP5 that won't work on the 3GS other than Facetime?
  • Reply 2 of 78
    asdasdasdasd Posts: 5,066member
    This rumour makes sense - except for the price. Still too pricey for the PAYG market, I would've thought. Possibly a $299 version. In any case keeping the 3GS will make up, a bit, for the loss of the iPhone 5 in terms of sales.
  • Reply 3 of 78
    Quote:
    Originally Posted by Smallwheels View Post


    If people loved the 3GS wouldn't it still be a great phone?



    It is.



    Quote:

    Is it so much slower that by comparison people wouldn't want it?



    No.



    Quote:

    What are the main differences between the 3GS and what will be the iP5?



    How could we know that?



    Quote:

    Is there software that works on the iP5 that won't work on the 3GS other than Facetime?



    Uh, of course?
  • Reply 4 of 78
    tleviertlevier Posts: 104member
    While there was a huge demand stated for iPhone 5, I'm not sure if that demand will stay true if they only release an iPhone 4S.



    With an iPhone 4S ($99 subsidized 16G) and an iPhone 5, ($199, $299 subsidized 32G/64G) I was thinking they might keep the iPhone 4 at a Free subsidized choice.



    But, alas, the rumors are seemingly squashing that pipe dream. Their media event will have to be pretty phenomenal to make me want to upgrade my iPhone 4. I currently could see this device lasting me until the next iPhone event, even if that was in February 2013.
  • Reply 5 of 78
    timuscatimusca Posts: 120member
    I highly doubt Apple will still sell the 3GS. It's really starting to show it's age, and Apple is too much of a perfectionist to continue selling something that makes them, frankly, look bad. There's just no point.
  • Reply 6 of 78
    negafoxnegafox Posts: 480member
    Using Safari on my iPhone 3GS under iOS 4 is a painful experience. It frequently crashes or displays most of a webpage in the gray checkerboard look for a while until it finishes loading. Maybe iOS 5 has more optimizations for the 3GS, but personally, I would opt to kill the line and let the 8 GB iPhone 4 become the new low-end model.



    The free Android phones are generally on par with the iPhone 4. Apple ought to kill the line than to compete with an aging phone that performs poorly compared to its direct competition.
  • Reply 7 of 78
    I don't see it. With iOS 5, the 3GS is already going to be behind in features (it already lacks FaceTime) and, if the 3GS and, frankly, the 3GS just doesn't have the horsepower to keep up with the demands new apps will place on the hardware. Apple won't like that, and customers won't like that they can get an iPhone but that it won't be able to run all apps well, or be upgraded to iOS 6 next year.



    Plus, that keeps Apple building 3 different iPhone models, which starts to put pressure on distribution, shipping, and stock.



    I would more expect the iPhone 4 to be $49 or free, with an iPhone 4S being $99, and the iPhone 5 being $199 and $299.



    What people forget, at least in the U.S., is that many of the phones which are "free" are actually only free with a mail-in rebate. The customer has to pay the $50-$100 for the phone up front, and then get the rebate later. Not with the iPhone 3GS ?*it's just a straight $49.
  • Reply 8 of 78
    the 3GS is noticeably outdated. It has lived it's life and personally I think it should die.



    A lower end iPhone 4 based model would be awesome though.
  • Reply 9 of 78
    Quote:
    Originally Posted by bizlaw View Post


    Plus, that keeps Apple building 3 different iPhone models...



    ...I would more expect the iPhone 4 to be $49 or free, with an iPhone 4S being $99, and the iPhone 5 being $199 and $299.



    Are you listening to yourself?!
  • Reply 10 of 78
    Quote:
    Originally Posted by AppleInsider View Post


    The same analyst also said in June that Apple is "expected" to offer the iPhone 3GS for free once the iPhone 5 launches. He sees the approach helping Apple with mid-market buyers, and would counter the growth of Google's Android platform.



    The 3GS is still a surprisingly snappy device, even on iOS5 but I'll be shocked if Apple keeps it around for another year. Granted, I haven't looked at the build cost estimates or anything, but remember, it uses "off the shelf" chips rather than Apple's customized A4 / A5 designs. I strongly suspect that it costs more for Apple to produce the boards for a 3GS than for an iPhone 4. While the cheaper plastic back and low-res, non-IPS LCD likely make up for some of this, I just don't see it making much business sense to continue making a (soon to be) three year old design based on a higher number of someone else's parts. If Apple wants to go after the low end market, I think they'll do it with a modified iPhone 4 design or else design a new phone altogether.
  • Reply 11 of 78
    eaieai Posts: 417member
    It's already free here in the UK on a 20GBP/month contract (roughly 30USD, including tax).
  • Reply 12 of 78
    john.bjohn.b Posts: 2,714member
    My 3GS doesn't not have enough horsepower to keep up with the current versions of iOS. (Teh Snappies, my arse!)



    I would think that Apple, knowing full well that's the case, has to be EOL'ing the 3GS when the new iPhone (iPhone 4S, iPhone 5, whatever) is released tomorrow.



    I'd expect the iPhone 4 is what would be available for free with subsidy or $400 without a contract.
  • Reply 13 of 78
    Quote:
    Originally Posted by asdasd View Post


    This rumour makes sense - except for the price. Still too pricey for the PAYG market, I would've thought. Possibly a $299 version. In any case keeping the 3GS will make up, a bit, for the loss of the iPhone 5 in terms of sales.



    Check it out:



    $49.00=iPhone4 with 2 yrs contract

    $399.00=iPhone4 for purchase-Prepaid services



    $99.00=iPhone4S-16GB-2yrs contract

    $199.00=iPhone4S-32GB-2yrs contract

    $299.00=iPhone4S-64GB-2yrs contract



    $199.00=iPhone5-16GB-2yrs contract

    $299.00=iPhone5-32GB-2yrs contract



    Just wait and see!!



    This was posted at 8.00am today in few forums!!



    May be you can add 3GS free with 2 yr contract !!! or $299.00 pre-paid !!!
  • Reply 14 of 78
    Quote:
    Originally Posted by eAi View Post


    It's already free here in the UK on a 20GBP/month contract (roughly 30USD, including tax).



    Yep, in Australia the iPhone 4 is free on a US$48 data/calls/sms 24 month contract.



    The iPhone 5 will likely be free as well on plans US$48 and above.



    The US is getting seriously ripped off only having the iPhone on two carriers.
  • Reply 15 of 78
    charlitunacharlituna Posts: 7,174member
    Quote:
    Originally Posted by John.B View Post


    My 3GS doesn't not have enough horsepower to keep up with the current versions of iOS.



    they will cut it but not due to horsepower.



    it's all about the cameras and FaceTime. Apple wants to get folks talking in ways that remove them from the carrier side of the game. So free FaceTime on wifi rather than making a phone call. Free iMessages instead of SMS. and so on
  • Reply 16 of 78
    cajuncajun Posts: 95member
    Quote:
    Originally Posted by TimUSCA View Post


    I highly doubt Apple will still sell the 3GS. It's really starting to show it's age, and Apple is too much of a perfectionist to continue selling something that makes them, frankly, look bad. There's just no point.



    I use my 3GS every day. While I'm anxiously awaiting the new upgrade, I don't have any complaints with the 3GS per se; in fact, my daughter is anxiously awaiting it as a hand-me-down.



    I really don't see any reason to force the retirement of the 3GS.
  • Reply 17 of 78
    gqbgqb Posts: 1,934member
    This is going to be a really interesting day Tuesday for me.

    We traditionally roll phones down, me to wife, to daughter. Important this year because daughter's phone died a couple of months ago.

    So I'll have to decide if I'm going to get the new top end phone, give iPhone 4 to wife, and her 3GS to daughter, of it I stick to my iPhone 4 (which I really really like) and just get a 'free' 8GB 3GS for daughter.



    If the new phone's only advantages are processor, RAM and camera I'm going to have to think long and hard about this. I have no complaints about any of those 3 with my IPhone 4.

    Multi-carrier and 4G are total non issues for me.



    We'll see Tuesday.
  • Reply 18 of 78
    Quote:
    Originally Posted by tlevier View Post


    While there was a huge demand stated for iPhone 5, I'm not sure if that demand will stay true if they only release an iPhone 4S.



    With an iPhone 4S ($99 subsidized 16G) and an iPhone 5, ($199, $299 subsidized 32G/64G) I was thinking they might keep the iPhone 4 at a Free subsidized choice.



    But, alas, the rumors are seemingly squashing that pipe dream. Their media event will have to be pretty phenomenal to make me want to upgrade my iPhone 4. I currently could see this device lasting me until the next iPhone event, even if that was in February 2013.



    Apple does't want you to upgrade your iPhone4 to the iPhone5.



    They want the iPhone 3GS folks to update to the iPhone5. Unlike the Android world, they are expecting their phones to truly be 2 year phones (and the 3GS has become a 3 year one, with it supporting iOS5).



    Come to think about it, this is not surprising at all, because otherwise Apple would not have gone through the trouble to have the 3GS support iOS5.
  • Reply 19 of 78
    solipsismsolipsism Posts: 25,726member
    Hmm... I'd think Apple would want to phase out the 480x360 displays this year in favor of the 960x720 panels, even if the low end gets a TN panel instead of IPS.
  • Reply 20 of 78
    ikolikol Posts: 369member
    Quote:
    Originally Posted by Smallwheels View Post


    If people loved the 3GS wouldn't it still be a great phone? Is it so much slower that by comparison people wouldn't want it? What are the main differences between the 3GS and what will be the iP5? Is there software that works on the iP5 that won't work on the 3GS other than Facetime?



    Personally I'm craving an iPhone 5 trapped within a 3GS' body.



    Antennagate notwithstanding, I've always found the 3GS a more durable phone.
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