It sounds unbelievable, but there's a strong probability that this may happen. You may be able to buy cheap iPhone without contract for as low as $350 by the end of this year. The word "without contract" is definitely enticing for most of us.
When the original iPhone was launched back in 2007, Apple only gave AT&T the exclusive right to sell it locked on its network in the USA. For about three years, AT&T enjoyed exclusivity. Needless to say, people went crazy and AT&T saw a massive number of iPhone sales however their network was not capable of handling the millions of iPhones that they had sold. Users started complaining of network issues, low signal strength and call dropping problems. Users started opting out by using software based iPhone unlock solutions that allowed them to use any carrier of their choice, on their iPhone but required jailbreaking iPhone as a pre-requiste. Previously, Apple only sold factory unlocked iPhones in some countries which include Canada and the UK.
A few months back, Apple released the CDMA iPhone 4 along with Verizon Wireless, ending AT&T's long exclusivity of the iPhone. Now just a few weeks back, Apple has begun selling officially unlocked GSM iPhone 4 in the USA, asking $649 for a 16GB variant.
Alright so the report in question here, about a cheap iPhone presumably pre-paid and without a contract will be sold for about $350. It seems only logical for Apple to do that, since many Android devices are available in the market for this price point and allowing people to buy cheap iPhone will only help their overall sales. BGR explains:
we just received some new information from an incredibly solid source of ours. According to our source, Apple will indeed be launching a prepaid / lower cost iPhone this year. We are told the handset will retail for no more than $350 without contract. Ready for the really interesting part? It’s entirely possible that the low-cost iPhone will in fact be the iPhone 3GS.
They also claim that Apple will be releasing the next generation iPhone by the end of August or in the mid of September 2011. Its going to be radically redesigned and will come bearing the A5 dual-core processor we have seen and used in the iPad 2. It is also rumored that Apple will be including a 1080p full HD recording capable camera module on the iPhone 5. Apart from that, reports also indicate that the next generation iPhone will have support for all U.S. Carriers which will include T-Mobile USA and Sprint as well.
Let's see when Apple goes public with the finer details regarding the next generation iPhone. Till then, let's keep our eyes on the rumor mill.