News & Information for Technology Purchasers NewsFactor Sites:     Enterprise Security Today     CRM Daily     Business Report     Sci-Tech Today  
This ad will display for the next 20 seconds. Please click for more information, or scroll down to pass the ad, or Close Ad.
Home Enterprise I.T. Cloud Computing Applications Hardware More Topics...
Eliminate costly downtime!
Find out how with Free White Paper
& enter to win a Samsung Galaxy Note
24/7/365 Network Uptime
Average Rating:
Rate this article:  
Analyst: Free iPhone 3GS Could  Spell Trouble for Rivals
Analyst: Free iPhone 3GS Could Spell Trouble for Rivals

By Jennifer LeClaire
October 5, 2011 11:22AM

    Bookmark and Share
"There is an entire group of people who have not been willing to get a smartphone, not because of the monthly outlay -- although there are a group of people who can't afford that -- but because they simply don't like spending money on phones," said analyst Avi Greengart. "They actually think they should get a free one."

Related Topics


Apple introduced the iPhone 4S yesterday. Although some industry watchers are expressing disappointment that it wasn't the much-hyped iPhone 5, others are pointing to what they see as the buried story: the broad range of price points.

With a two-year contract with AT&T, Verizon Wireless or Sprint, the iPhone 4S starts at $199 for the 16GB model and $299 for the 32GB model in the U.S. -- and even adds the new 64GB model for $399 for heavy media users.

But Apple didn't remove its old inventory from the market. In fact, apple heavily discounted it. Now, the iPhone 4 is selling for just $99 and iPhone 3GS will be available for free with a two-year contract. The keyword here is free -- and analysts expect that to help Apple compete with other handset makers, including Android devices.

Tapping Pent-Up Demand

"Apple dramatically expanded the price points that the iPhone is available at and the distribution," said Avi Greengart, an analyst at Current Analysis. "The key competitive takeaway that I got is this: If your free phone isn't better than the iPhone 3GS, you are in trouble. If you are at pretty much any carrier, if your $99 mid-tier phone isn't better than the iPhone 4, you are in trouble."

T-Mobile appears to have the most to lose from the deal in the U.S., since it doesn't carry the iPhone. But wireless carriers that carry the iPhone in other countries are fewer and farther between. So the expanded price points are not only good for Apple, but for the carriers that offer the devices around the world who can now tap into the pent-up demand for a more affordable iPhone.

"While it is undeniable that the purchase price of the device has little bearing in terms of the overall cost of what you include, consumer behavior is different," Greengart said. "Consumers do care if they are paying $50 or $100 or $200 or nothing. It deeply influences consumer behavior."

A 3GS Is Still an iPhone

Consider the statistics: More than 172 million people in the United States use feature phones, according to comScore, and about 61.5 million use smartphones. Globally, feature phones are even more pervasive. That means a huge market potential for smartphone makers that can offer affordable devices.

"There is an entire group of people who have not been willing to get a smartphone, not because of the monthly outlay -- although there are a group of people who can't afford that -- but because they simply don't like spending money on phones," Greengart said. "They actually think they should get a free one."

Greengart's overarching point: Free phones are not as good as an iPhone 3GS. Consumers who opt for an iPhone 3GS may not have the latest and greatest iPhone. But they nonetheless have an iPhone. And with an iPhone 3GS, consumers have access to most of the apps and iTunes content and the Apple user interface.

"It's also interesting to note that the iPhone 4S is an incremental update to the iPhone 4 but the iPhone 4 is the best-selling smartphone in the world right now -- and that's after being on the market for 16 months," Greengart said. "So consumers really like the iPhone 4 and I think they will like the iPhone 4S better."

Tell Us What You Think


APC has an established a reputation for solid products that virtually pay for themselves upon installation. Who has time to spend worrying about system downtime? APC makes it easy for you to focus on business growth instead of business downtime with reliable data center systems and IT solutions. Learn more here.

1.   Phones Annoy Patent Trial Judge
2.   Apple vs. Samsung: Latest News
3.   Hey Siri, Can You Hear Me Now?
4.   Finding Apple-Samsung Jury Hard
5.   5.5-inch iPhone 6 Rumored

Phones Annoy Patent Trial Judge
Disrupting Apple-Samsung proceedings.
Average Rating:
Finding Apple-Samsung Jury Hard
Locals have strong opinions on case.
Average Rating:
Kill Switch Could Save Users $2.6B
Carriers, however, are not impressed.
Average Rating:
Product Information and Resources for Technology You Can Use To Boost Your Business

Network Security Spotlight
Tips To Defeat the Heartbleed Bug
Heartbleed headlines continue as IT admins scramble for answers no one has. Early reports of stolen personal data, including 900 social insurance numbers in Canada, are starting to trickle in.
NSC Backs Disclosing Software Vulnerabilities
Disclosing vulnerabilities in commercial and open source software is in the national interest and shouldn't be withheld unless there is a clear need, says the National Security Council.
Heartbleed Flaw Affects Hardware, Too
It appears the Heartbleed security bug affects not just Web sites, but also the networking equipment that connects businesses and homes to the Net, including Cisco and Juniper's equipment.

Enterprise Hardware Spotlight
Vaio Fit 11A Battery Danger Forces Recall by Sony
Using a Sony Vaio Fit 11A laptop? It's time to send it back to Sony. In fact, Sony is encouraging people to stop using the laptop after several reports of its Panasonic battery overheating.
Continued Drop in Global PC Shipments Slows
Worldwide shipments of PCs fell during the first three months of the year, but the global slump in PC demand may be easing, with a considerable slowdown from last year's drops.
Google Glass Finds a Home in Medical Education, Practice
Google Glass may find its first markets in verticals in which hands-free access to data is a boon. Medicine is among the most prominent of those, as seen in a number of Glass experiments under way.

Mobile Technology Spotlight
Is Amazon Launching a 3D Smartphone?
Once known for selling books on an e-commerce platform, Amazon is now a bona fide hardware maker -- and it's reportedly rolling out an innovative smartphone with a 3D screen.
Review: S5 Features Useful, Less About Gimmicks
There's a lot to like about Samsung's new Galaxy S5 smartphone -- among them, its relative lack of features. Samsung chose to focus on features people might actually want, not gimmicks.
Analyst: Samsung Galaxy S5 Won't Sway iPhone Lovers
The Samsung Galaxy S5 hits store shelves on Friday and the reviews are starting to pour in. The question is: Can the latest in the Galaxy line grab more market share from Appleā€™s iPhone?

NewsFactor Network
Home/Top News | Enterprise I.T. | Cloud Computing | Applications | Hardware | Mobile Tech | Big Data | Communications
World Wide Web | Network Security | Data Storage | Small Business | Microsoft/Windows | Apple/Mac | Linux/Open Source | Personal Tech
Press Releases
NewsFactor Network Enterprise I.T. Sites
NewsFactor Technology News | Enterprise Security Today | CRM Daily

NewsFactor Business and Innovation Sites
Sci-Tech Today | NewsFactor Business Report

NewsFactor Services
FreeNewsFeed | Free Newsletters | XML/RSS Feed

About NewsFactor Network | How To Contact Us | Article Reprints | Careers @ NewsFactor | Services for PR Pros | Top Tech Wire | How To Advertise

Privacy Policy | Terms of Service
© Copyright 2000-2014 NewsFactor Network. All rights reserved. Article rating technology by Blogowogo. Member of Accuserve Ad Network.