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As iPhone 3GS approaches $200 and below, it becomes a viable and low-cost prepaid phone

Élyse Betters | Jul 20 2012 - 8:45 am PT

The iPhone 4 and 4S are available as prepaid devices for as low as $399 and $499, respectively on Cricket, but now Apple is making available its iPhone 3GS on India’s Aircel for just $180 with a $55 deposit on airtime/data. This corresponds with the global market pattern that has developed over the past few months, where the iPhone 3GS is trending toward $200 unsubsidized.

Aircel, which is India’s seventh-largest carrier, offers the iPhone 3GS for 9,999 Rs, or $181 USD, while the data commitment is 3,000 Rs, or $54.37 USD, bringing the total cost of the smartphone to 12,999 Rs ($236 USD).

As we gear up for a new iPhone release this fall, the 4 and 4S will likely continue to drop in price, putting the 3GS well below $200 and in the neighborhood of the $100 Android devices that act as popular first Internet machines in the huge developing world/BRIC countries. We are basically talking about anyone who currently cannot afford a smartphone over $100.

The fact that Apple is giving the new iOS 6 to the iPhone 3GS is a big deal too, considering Apple passed on the more powerful, original iPad. It seems to hint there are still some legs left in the iPhone 3GS.

In a note from May, Jefferies analyst Peter Misek said that the iPhone 3GS would live on through the release of the next iPhone.

[Misek]asserts that Apple has signed an agreement “with a major global distributor” which will look for ways to penetrate the pre-paid and developing markets. He thinks the phone will be repriced (at the wholesale level) from $375 down to the $200 to $250 range.

Misek also contends that sell side estimates for June quarter iPhone build plans are too low as a major South American production plan is not included in their calculations. (The plant in question, he says, is co-owned by governments and local players with Hon Hai holding a minority stake.) He estimates total calendar Q2 iPhone builds of 28 million to 30 million, ahead of the Street consensus in the 26 million to 28 million range.

With the wholesale price is already falling far below Misek’s estimates (and indeed they were already lower when he made the prediction), there is even more opportunity for Apple, especially if it can keep its margins –or perhaps Apple feels it can defer its margins and make them up on revenues later.

(via IBNLive and TNW)

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