Apple is prepared to offer the iPhone 3GS, first released in 2009, as a free subsidized phone with a two-year service contract, according to a new report.



From Apple Insider:

Analyst Mike Abramsky with RBC Capital Markets said on Wednesday that Apple is "expected" to offer the iPhone 3GS for free when the iPhone 5 launches later this year. He said this approach would help Apple with mid-market buyers, and would also help the iPhone counter the growth of Google's Android platform.

"While a $49 iPhone is already available (AT&T), psychologically a $0 iPhone provides a compelling offer," Abramsky wrote in a note to investors. "Proprietary survey data... suggests 14% are very/somewhat likely to buy the iPhone 3GS for free with 2-year contract, exceeding buying interest for the iPad (13%) and original iPhone (9%)."

  Apple will offer free iPhone 3GS with 2-year mobile contract - report