With talk of Apple seeking to release a cheaper iPhone being revived in recent days, RBC Capital Markets analyst Mike Abramsky now weighs in to report that he believes that Apple will be keeping the iPhone 3GS around even after the next iPhone hardware update, offering the device for free with a two-year contract and at $399 for unsubsidized purchases. Apple currently sells an 8 GB iPhone 3GS for $49 on a two-year contract and $449 unsubsidized.

As its entry-level iPhone strategy, Apple is expected to cut iPhone 3GS to $0 (on contract, $399 unsubsidized) in conjunction with iPhone 5 launch (we continue to expect it in September). 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 unsubsidized), and Apple to drop iPhone 4 pricing to $99 ($499 unsubsidized).

The claimed $399 price point for the unsubsidized iPhone 3GS is a bit higher than other reports have been hinting at, with the analyst report from earlier this week suggesting that Apple would try to come in at $349 for its cheaper iPhone.

iphone 3gs oblique
Earlier reports had claimed that Apple was working on a smaller iPhone form factor that could allow the company to offer the device for as little as $200 unsubsidized. But while some rumblings of a new, smaller iPhone option for this year continue to float around, Abramsky believes that the "baby iPhone" will not be released until 2012, in part to fully take advantage of iCloud leverage that may not be possible as the service debuts.

Related Forum: iPhone

Top Rated Comments

wordoflife Avatar
187 months ago
Source? Link?
In Europe, mainly countries like the UK (and even Canada ... yes I am aware that is not in Europe) get the iPhone 4 for dirt cheap or even free provided you sign a contract. Carriers in the US are very greedy.

Back to the article ... why would they keep the 3GS? It's going to be 2 generations behind...
Score: 6 Votes (Like | Disagree)
MonkeySee.... Avatar
187 months ago
Really? Is anyone going to get a phone that is soon to be 3 generations old?

My 3GS is getting tired and i'm sure iOS 5 isn't going to help. I can't wait to palm it off on the sister-in-law.
Score: 5 Votes (Like | Disagree)
bushido Avatar
187 months ago
lol america

i can already get the iPhone 4 for free with a 2 year contract
Score: 4 Votes (Like | Disagree)
Cloudsurfer Avatar
187 months ago
If we're living in the past, then you must see no value in the internet, or Macrumors for that matter. Very little innovation comes out of Europe anymore. If you don't see that, you're just ignorant. Apple, Intel, AMD, Microsoft (when the copier isn't running), and Google (them too) are the main sources of innovation, at least in the tech world, and they're all American-based. Europe needs to get its act together. You guys lost John Ive all those many years ago, and for good reason.

Europe has BMW, Mercedes-Benz, Ford (the European branch), Fiat, Renault, Citroen, Peugeot, Volkswagen, Ducati, KTM, Suzuki (European branch), Triumph, Airbus...

Europe is the biggest vehicle export region in the world. Most vehicle innovation in terms of tech and fuel economy originates in Europe. If you think America is the only innovative country left, you're.. well, to backfire just ignorant.

Fact of the matter is that Europe has a very different mobile phone culture than America, in part due more competition that drives companies to lower their prices. For the past decade, phones have been free or very cheap with contracts where I live. And you might not like to hear this, but that has had a significant contribution to the success of iPhone. Thanks to us humble Europeans :)
Score: 3 Votes (Like | Disagree)
longofest Avatar
187 months ago
Really? Is anyone going to get a phone that is soon to be 3 generations old?

My 3GS is getting tired and i'm sure iOS 5 isn't going to help. I can't wait to palm it off on the sister-in-law.

There are a bunch of costs associated with having so many different product lines going at the same time. You'd either have to tool up another assembly line to do the model, or do a production run of your lowest expected volume model and then retool and switch models, which would leave inventory lying around, and we know how much Tim Cook likes inventory (http://money.cnn.com/2009/01/15/technology/cook_apple.fortune/index.htm).

Inventory, Cook has said, is "fundamentally evil," and he has been known to observe that it declines in value by 1% to 2% a week in normal times, faster in tough times like the present.

I expect Apple to stick to their previous-model and latest-model strategy and not complicate things any more than needed.
Score: 3 Votes (Like | Disagree)
Ugg Avatar
187 months ago
Americans are getting ripped off so bad.

I can see keeping the 3GS for emerging markets, but I would prefer a stripped down version of current tech, rather than something that is 3 years old. If this report is true, it looks like I still won't be buying an iPhone and will have to make do with my Android.
Score: 3 Votes (Like | Disagree)

Popular Stories

iOS 26

iOS 26.1 Coming Soon: New Features for Your iPhone and Release Date

Monday October 27, 2025 7:55 am PDT by
The upcoming iOS 26.1 update includes a handful of new features and changes for iPhones, including a toggle for changing the appearance of the Liquid Glass design, "slide to stop" for alarms in the Clock app, and more. Below, we outline key details about iOS 26.1. Release Date Given that Apple has yet to seed an iOS 26.1 Release Candidate, which is typically the final beta version, the...
maxresdefault

Apple TV 4K Could Still Launch Before 2025 Ends: All the Rumored Features

Monday October 27, 2025 4:51 pm PDT by
Apple is designing an updated version of the Apple TV 4K, and rumors suggest that it could come out sometime in the next couple of months. We're not expecting a major overhaul with design changes, but even a simple chip upgrade will bring major improvements to Apple's set-top box. Subscribe to the MacRumors YouTube channel for more videos. We've rounded up all the latest Apple TV rumors. ...
iOS 26

6 New Things Your iPhone Can Do in iOS 26.1

Wednesday October 29, 2025 4:22 am PDT by
Apple is about to drop iOS 26.1, the first major point release since iOS 26 was rolled out in September, and there are at least six notable changes and improvements to look forward to. We've rounded them up below. Apple has already provided developers and public beta testers with the release candidate version of iOS 26.1, which means Apple will likely roll out the update to all compatible...
M6 MacBook Pro Feature 1

M6 MacBook Pro: Release Date, Pricing, and What to Expect

Monday October 27, 2025 9:15 am PDT by
Apple this month refreshed the 14-inch MacBook Pro base model with its new M5 chip, and higher-end 14-inch and 16-inch MacBook Pro models with M5 Pro and M5 Max chips are expected to follow in early 2026. However, these machines will represent the final update to the current design, with Apple reportedly developing a completely new version of the MacBook Pro packed with next-generation hardware...
iOS 26

Apple Seeds iOS 26.1, iPadOS 26.1, and macOS Tahoe 26.1 Release Candidates

Tuesday October 28, 2025 1:07 pm PDT by
Apple today provided developers and public beta testers with the release candidate versions of upcoming iOS 26.1, iPadOS 26.1, macOS Tahoe 26.1, tvOS 26.1, watchOS 26.1, and visionOS 26.1 updates for testing purposes. The RCs betas come a week after Apple released the fourth betas. The new betas can be downloaded from the Settings app on a compatible device by going to General > Software...
iOS 26 Battery Glass Feature

iOS 26.1 Beta Liquid Glass Battery Drain Test: Tinted vs Clear Mode

Friday October 24, 2025 2:30 pm PDT by
In the fourth iOS 26.1 beta, Apple added a "Tinted" option that reduces the translucency of Liquid Glass for those who prefer a more opaque look. I saw some comments wondering whether the setting might preserve battery life, so I thought I'd do some testing. Test Settings I did four separate tests using the iPhone 17 Pro Max, and I kept the parameters as similar as possible. Here are the...
ios 26 digital id passport wallet

Apple Says U.S. Passport Feature on iPhone is Coming Soon

Monday October 27, 2025 7:41 am PDT by
You will "soon" be able to add a digital version of your U.S. passport to your iPhone, according to Jennifer Bailey, vice president of Apple Pay and Apple Wallet. Bailey reiterated that the feature is coming soon during her keynote at the Money20/20 USA conference in Las Vegas on Sunday. On its iOS 26 page, Apple says the delayed feature will be "coming later this year." Apple's...
All Screen iPhone 2027 Feature 1

iPhone XX? 6 Features Rumored for Apple's 20th Anniversary iPhone

Monday October 27, 2025 4:01 pm PDT by
For the 10th anniversary iPhone that came out in 2017, Apple introduced the iPhone X with Face ID, notch, and minimized bezels, providing more display space than ever before. The 20th iPhone anniversary is approaching and Apple wants to take the iPhone X design even further. We're two years away from the 2027 iPhone, but it's tough for Apple to keep major changes under wraps. We've rounded...
macos tahoe

Here Are Apple's Release Notes for macOS Tahoe 26.1

Tuesday October 28, 2025 1:21 pm PDT by
Apple today provided developers and public beta testers with the release candidate version of macOS Tahoe 26.1, which means the update will likely see a public launch next week. The release candidate includes notes on what's in the update, so we have a full picture of the new features that Apple has included. macOS Tahoe 26.1 adds AutoMix support over AirPlay, improved FaceTime audio...