Apple iPhone 3GS Will Live on in Emerging Markets

Apple isn’t ready to retire its three-year old iPhone 3GS yet. While the company is currently selling its 8 GB iPhone 3GS as its entry-level model in various markets, the pending release of the next iPhone this year is likely to render the 3GS obsolete (in favor of the iPhone 4, which will then become Apple’s entry-level model).

Not yet obsolete: Analysts say Apple's three-year old Apple iPhone 3GS model will live on in prepaid markets. (Paul Sakuma/AP)

Analysts say, however, that Apple is likely to continue selling the iPhone 3GS in emerging markets. Jeffries analyst Peter Misek has told AppleInsider that the Cupertino, CA company has signed agreements with “a leading distribution and logistics company” in order to ship the iPhone 3GS around the world as a prepaid smartphone.

With this, the no-contract, prepaid cost of the iPhone 3GS is reported to be at around US$ 250 to US$ 300 — a price drop from its current no-contract price of US$ 375. Along with this price drop, analysts also expect Apple to lower the price of the current iPhone 4S and 4 models, once it launches an upgrade this year (perhaps the iPhone 5, or the “new iPhone” depending on which model nomenclature Apple follows).

U.S. carrier AT&T currently offer the iPhone 4S free under a two-year contract.

Perhaps Apple wants to take advantage of the popularity of low-end smartphones currently dominated by Android devices. Considering emerging markets still have a big potential in terms of smartphone ownership it might be a good idea for Apple to market a low-cost device, while still maintaining its premium image for its flagship iPhone. Asian countries like China and India could be a target. China

Computerworld‘s Jonny Evans believes this move could help raise Apple’s influence in developing markets. “Apple will be hoping that offering an iPhone contract-free at a relatively affordable price into emerging markets, and widening distribution of a contract-free alternative in developed markets will boost iPhone sales,” he writes.

Observers note that a low-cost “iPhone nano” may have been in the works in the past few years, although no such device had materialized.

Apple does not differentiate too much in terms of model lineup. While other manufacturers have dozens of models and variants (like Samsung), Apple only offers as many as five current models in its lineup — at present, three iPhone 4S models with different capacities, and one model of the iPhone 4 and 3GS each. The previous years’ models are generally considered the entry-level device.

The question now is whether Apple will be able to flood the low-end market with its entry-level, prepaid iPhone 3GS.