Here's Why Apple Should Offer Free iPhones This September

More

ReutersiPhonePostSize.jpg

By now, it's all but assumed that Apple is going to release a second phone when it rolls out the next iteration of the iPhone sometime in September. But what if Apple has another trick up its sleeve? What if Apple, in addition to rolling out the next iteration of its popular smartphone (the iPhone 5) and a mid-range iPhone 4S, also announces that it will subsidize the complete cost of the iPhone 3GS?

That's the idea that RBC Capital analyst Mike Abramsky is kicking around this morning. "As its entry-level iPhone strategy, Apple is expected to cut iPhone 3GS to $0 (on contract, $399 unsubsidized) in conjunction with iPhone 5 launch," he wrote in a research note, according to Forbes. "This approach is intended to target mid-market smartphone buyers and counter Android's mid-market expansion."

If Apple can pull together all of the components required to expand that quickly at one time -- the parts, the labor, the necessary factory space -- I can't think of a better move that the company could make going forward. I think, though, that Abramsky has one thing wrong. It's not a mid-market expansion; it's a lower-mid-market expansion. The iPhone 5 will be the luxury product that long-time Apple fanboys will rush out to purchase, the iPhone 4S is the mid-market play and the subsidized iPhone 3GS goes after a completely new market.

Subsidizing the iPhone 3GS is a way to bring in those consumers who have carrier contracts, but have never purchased a smartphone because there was always a free option available to them. It's a way to bring in my stepfather, who refuses to buy a new car if it has automatic windows and locks. (The psychology of this, on the consumer side, doesn't make complete sense: With an expensive two-year contract, the cost of a unit upgrade at the time of purchase is relatively minor when considered over said unit's lifespan.) This move would allow Apple to expand its market reach and share even as new competitors continue to mount challenges to the iPhone's supremacy.

Image: Jo Yong Hak/Reuters.

Jump to comments
Presented by

Nicholas Jackson is a former associate editor at The Atlantic.

Get Today's Top Stories in Your Inbox (preview)

What's the Number One Thing We Could Do to Improve City Life?

A group of journalists, professors, and non-profit leaders predict the future of livable, walkable cities


Elsewhere on the web

Join the Discussion

After you comment, click Post. If you’re not already logged in you will be asked to log in or register. blog comments powered by Disqus

Video

Adventures in Legal Weed

Colorado is now well into its first year as the first state to legalize recreational marijuana. How's it going? James Hamblin visits Aspen.

Video

What Makes a Story Great?

The storytellers behind House of CardsandThis American Life reflect on the creative process.

Video

Tracing Sriracha's Origin to Thailand

Ever wonder how the wildly popular hot sauce got its name? It all started in Si Racha.

Video

Where Confiscated Wildlife Ends Up

A government facility outside of Denver houses more than a million products of the illegal wildlife trade, from tigers and bears to bald eagles.

Video

Is Wine Healthy?

James Hamblin prepares to impress his date with knowledge about the health benefits of wine.

Video

The World's Largest Balloon Festival

Nine days, more than 700 balloons, and a whole lot of hot air

Writers

Up
Down

More in Technology

Just In