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iPhone for free?

Another day, another analyst cheerfully speculating about the iPhone 5 and the future of Apple's smartphone lineup. Earlier this week, Chris Whitmore of Deutsche Bank predicted that Apple would complement the iPhone 5 with a '4S' model designed to be sold cheaply on pre-paid tarrifs. Now, Mike Abramsky of RBC Capital Market predicts an alternative approach Apple can take to the low-end market - it's called the iPhone 3GS.

Normally, when Apple introduces a new iPhone, they discount the previous model, and the model before that disappears. For example, when the iPhone 4 came along, the iPhone 3GS became cheaper - $49 on many American pre-paid plans - and the iPhone 3G disappeared from stores. According to this pattern, the 3GS ought to be discontinued when the iPhone 5 is released.

But Abramsky reckons Apple will keep the 3GS around as its way into that coveted low-end mass market. They'll give it away on monthly contracts, meaning there'll be a regular free iPhone for the first time, Abramsky predicts. In the UK, where the 3GS is already often free, this could mean it being available with rebates or free on a 12-month contract.

Is this likely? We dunno. It sounds more feasible than the idea of Apple making a special version of the iPhone for lower-cost markets, which sounds like a lot of investment for no clear reason. But we're not sure how much lasting appeal the 3GS has, cheap or otherwise - it's looking pretty dated at this point.

Our guess? Apple will stick to the usual pattern, but maybe find a way - through a slight reduction in flash storage or similar - to knock down the price of the iPhone 4 a little more than usual. But they could surprise us. They've done it before.

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