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Apple is planning on cutting the price of the iPhone 3GS to offer it free on contract once the iPhone 5 is released later this year and the move is supposedly aimed at providing greater mid-market competition for Android. Apple is expected to offer the two-year-old iPhone 3GS for free with a new two-year wireless service contract and an iPhone 3GS at no cost would also counter free phone offers for other platforms………….

Apple is prepared to offer the iPhone 3GS as a free subsidized phone with a two-year service contract and the analyst believes that throwing in a free iPhone 3GS would not only add $7 billion of revenue and $1.82 of EPS to the company income statement but also help it maintain its gross margin of 47% to 48% on the iPhone taking in consideration the sheer demand for the device. He further suggested that Apple iPhone 3GS can be rolled out with a carrier contract for free or a unsubsidized price of $399 with the launch of iPhone 5 in September. Earlier released through operators like Vodafone and Airtel in June 2009, the price cut directly pegs Apple iPhone 3GS with popular Android devices like Google Nexus S LCD which retail at about the same price range of Rs 20,000. Apple iPhone 3GS is powered by a 600Mhz processor and is supported by Apple’s iOS version 4.3. Equipped with a 3.5-inch capacitive touchscreen, iPhone 3GS comes with good connectivity features such as 3G, Wi-Fi, GPS with A-GPS support, EDGE/GPRS and Bluetooth 2.1 with A2DP and includes a 3.15 megapixel camera with autofocus capabilities. At the moment it seems Airtel and Aircel will be offering the iPhone 3GS 8GB, but it is likely that others will follow the suit.

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