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iPhone 3GS to be Offered Free on Contract?

Apple will reportedly keep its iPhone 3GS alive and offer it free with a service contract or $399 unsubsidized, says RBC Capital Markets analyst Mike Abramsky.
AppleInsider reports that 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.

This would be a change from Apple’s traditional model that saw the two year old device dropped and the previous generation device discounted.
Last week, it was reported that an 8GB iPhone 4 appeared in Apple’s inventory system and many believe it will be this device that Apple will offer for a low cost. Photos of this device have also leaked out of Foxconn’s Brazil factory.

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