With the arrival of a new iPhone in about two weeks, the oldest iPhone, the 3GS, may be sent out to pasture. This isn’t uncommon, now that Apple has built enough iPhones to have a nice three tiered platform; a low-end or old device for free on contract, a $99 mid-level device and finally a high-end or flagship device for $199. When Apple introduced the iPhone 4S, they announced the iPhone 3G would be terminated, the 3GS (only offered by AT&T) would become a free device, with a new two-year contract, and the iPhone 4 would drop down to only $99, but would also have its storage cut in half.
Now with the iPhone 5 on the verge of being announced and possibly going on sale in about two weeks, rumors suggest that Apple will now kill off the 3GS, at least in the States, and replace it with a “free on contract” iPhone 4, which will now be available on three of the biggest carriers in the States, instead of just one. The iPhone 4S would then replace the 4 as the mid-range device and will probably have its storage cut to 8GB too. Then, obviously, the iPhone 5 will become the new, premier flagship device.
it is possible that Apple may keep the iPhone 3GS in production for emerging markets, these markets may exist in countries that may not be able to afford an expensive iPhone, but could afford an iPhone with no contract for under $200. This would allow Apple to further penetrate untapped markets and allow them grow their overall marketshare in their battle against Android.