14 DAY TRIAL // Analyst opinions are divided on Apple’s long-term plans with the iPhone business. One Mike Abramsky of RBC Capital believes there is a chance Apple will continue to produce iPhone 3GS devices even as the iPhone 5 is launched and the iPhone 4 price is cut.
The reason? So that they can continue to sell it for free.
That’s right - $0 for a new iPhone 3GS with a two-year contract from the operators eager to carry it, goes Abramsky’s forecast.
“While a $49 iPhone is already available (AT&T), psychologically a $0 iPhone provides a compelling offer,” Abramsky writes in a research note.
Citing a survey conducted by ChangeWave between June 7th - 14th on 1,500 respondents, Abramsky informs that a great deal of people would take the plunge.
Specifically, subjects were asked: “If the Apple iPhone 3GS became available for free ($0) but required a 2-year AT&T service contract, how likely is it that you would get a new Apple iPhone 3GS for yourself or someone else (e.g., a family member) in the future?”
Abramsky provides the survey data which “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%),” he writes.
The analyst estimates that a free iPhone 3GS would bring in roughly $7 billion of additional revenue.
He doesn’t forget to take into account that such a move would likely cannibalize other iPhone sales by around 10%.
And while he sees the free iPhone 3GS as a viable option for Apple to further strengthen its position in the mobile phone market, Abramsky shares many of his fellow analysts’ belief that Cupertino is to introduce a mini iPhone one day.
Speaking on behalf of his research firm, he tells investors: “We continue to expect Apple to launch a smaller, prepay iPhone – but more likely in 2012, both to avoid iPhone 5 cannibalization, and as its design may deeply leverage iCloud services for convenience and affordability.”