Get Your iPhones Free

Apple AAPL is preparing to compete in the “free phone with contract” market with the iPhone 3GS when it launches the iPhone 5 later in the year. RBC Capital Markets General Manager Mike Abramsky said in a note to investors that Apple will be offering the 3GS for free to attack mid-market smartphone buyers.

Back in 2009, the 3GS was considered an impressive upgrade from the 3G due to the speed (as the additional ‘S' in the name would suggest). Most reviews at the time deemed the extra cost well worth it. The 3GS looked nearly identical to the 3G, but it was just a more powerful beast, complete with a 3-megapixel camera which added auto focus and video recording. The fingerprint-resistant screen was also considered a nice touch, as was the compass.

Fast forward a year, and the iPhone 4 was unleashed. Thinner than its predecessor, the iPhone 4 sported faster, better and stronger hardware, particularly regarding the camera and video recording technology. However, anyone not intending to take pictures or make movies with their phone would likely be just as happy with the 3GS.

With all of that in mind then, it seems as if a free 3GS with a contract would be a fantastic deal. One has to wonder how a cell phone provider not compatible with the iPhones, like Verizon VZ, will compete.