Why should Apple offer a free iPhone in September?

Rumors are rife that Apple will uncover the most awaited iPhone 5 along with a mid-ranged iPhone 4S sometime in September. But have you ever thought of a free iPhone coming with the package? According to RBC Capital analyst Mike Abramsky, Apple could increase its addressable market by subsidizing the complete price of the iPhone 3GS.

As its entry-level iPhone strategy, Apple is expected to cut iPhone 3GS to $0 (on contract, $399 unsubsidized) in conjunction with iPhone 5 launch, Abramsky wrote in a research note, Forbes reported. He added that the approach is intended to target mid-market smartphone buyers and counter Android's mid-market expansion.

In his note, Abramsky mentioned about a proprietary survey that found a free version of the iPhone would be helpful for Apple in doubling global market opportunity. The move will also likely to speed up iPhone's share growth outside of North America.

According to Abramsky, Apple may launch iPhone 5 at $199 and $299 on a subsidized basis, while the company may lower the price of iPhone 4 to $99. iPhone 3GS is already available at just $49, but a free iPhone would definitely be a compelling offer, Abramsky said.