Apple is planning on cutting the price of the iPhone 3GS to offer it free on contract once the iPhone 5 is released later this year, an analyst has claimed.
The move is supposedly aimed at providing greater mid-market competition for Android, and could double Apple's global target market overnight.
RBC Capital Markets general manager Mike Abramsky revealed the news in a business note to investors yesterday, suggesting offering the iPhone 3GS free on contract would open up new markets for Apple, and provide Android with some stiff mid-range competition.
“As its entry-level iPhone strategy, Apple is expected to cut iPhone 3GS to $0 (on contract, $399 unsubsidised) in conjunction with iPhone 5 launch (we continue to expect it in September),” Abramsky's note claimed.
“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 unsubsidised), and Apple to drop iPhone 4 pricing to $99 ($499 unsubsidised).”
Abramsky goes on to describe a free iPhone as “a compelling offer”, adding that he also expects Apple to launch a smaller, pre-paid version of the phone next year.
It's worth noting, however, that Abramsky doesn't make any mention of where his information has come from, so we can't be sure at this stage just how seriously we should be taking his claims.