News & Information for Technology Purchasers NewsFactor Sites:     Enterprise Security Today     CRM Daily     Business Report     Sci-Tech Today  
Home Enterprise I.T. Cloud Computing Applications Hardware More Topics...
Tame your scariest paperwork. Find Out How
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

Name: is the market and technology leader in Software-as-a-Service. Its award-winning CRM solution helps 82,400 customers worldwide manage and share business information over the Internet. Experience CRM success. Click here for a FREE 30-day trial.

1.   Mac OS Yosemite Beta 4 Released
2.   Apple Smart Watch Patent Surfaces
3.   iPhone 6: Bad for Apple Tablet Sales?
4.   Longtime Apple Director Steps Down
5.   Business Impact of IBM-Apple Deal

Apple Digital Book Settlement Set
But company still appealing decision.
Average Rating:
Mac OS Yosemite Beta 4 Released
Public preview could be coming soon.
Average Rating:
iPhone 6: Bad for Apple Tablet Sales?
Most likely, it will be a huge hit.
Average Rating:
Product Information and Resources for Technology You Can Use To Boost Your Business

Network Security Spotlight
Wall Street Journal Hacked Again
Hacked again. That’s the story at the Wall Street Journal this week as the newspaper reports that the computer systems housing some of its news graphics were breached. Customers not affected -- yet.
Dropbox for Business Beefs Up Security
Dropbox is upping its game for business users. The cloud-based storage and sharing company has rolled out new security, search and other features to boost its appeal for businesses.
34 European Banks Hit by Android-Skirting Malware
Criminals have been finding gaping holes in Android-based two-factor authentication systems that banks around the world are using. The result: 34 banks in four European countries have been hit.

Enterprise Hardware Spotlight
Microsoft Makes Design Central to Its Future
Over the last four years, Microsoft has doubled the number of designers it employs, putting a priority on fashioning devices that work around people's lives -- and that are attractive and cool.
Contrary to Report, Lenovo's Staying in Small Windows Tablets
Device maker Lenovo has clarified a report that indicated it is getting out of the small Windows tablet business -- as in the ThinkPad 8 and the 8-inch Miix 2. But the firm said it is not exiting that market.
Seagate Unveils Networked Drives for Small Businesses
Seagate is out with five new networked attached storage products aimed at small businesses. The drives are for companies with up to 50 workers, and range in capacity from two to 20 terabytes.

NewsFactor Network
Home/Top News | Enterprise I.T. | Cloud Computing | Applications | Hardware | Mobile Tech | Big Data | Communications
World Wide Web | Network Security | Data Storage | CRM Systems | 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

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.