Apple's Cheap iPhone Will Be A 3GS?

Apple will release a cheap iPhone model when the iPhone 5 debuts. The latest gossip comes from Mike Abramsky of RBC Capital who sees things a little differently. The analyst believes we’ll see Apple offer a cheaper iPhone, but it won’t be a new model. He thinks the 3GS is the rumored low-priced smartphone…

“While a $49 iPhone is already available (AT&T), psychologically a $0 iPhone provides a compelling offer.”

He estimated that an iPhone 3GS with no upfront cost would add $7 billion of revenue and $1.82 earnings per share. Apple can easily sell 3GS at $399 full retail and they could still have good profit margins. Approximately $178 is the manufacturing cost Apple incurs for a single device plus a bit more for processing and shipping.


In addition to fall in price of 3GS, Mike Abramsky stated that iPhone 4 will be sold at $99. This won't be hard to swallow for Apple as it has lowered the price on all previous iPhone models with the release of new ones.