Apple rumors have been keying in on a potential free iPhone 3GS offer after the launching of the highly anticipated iPhone 5 and iPhone 4S.  Signing a 2 year contract enables users to pickup a free iPhone 3GS as part of perhaps 2 strategies for Apple.  First is clearing inventory and the second is tapping into the low to mid-range smartphone user consumer market.

Apple has catered to the high range smartphone customers with its iPhone series, while leaving out the low and midrange consumers.  That could change if the company decides to roll out the iPhone 4S and iPhone 3GS freebie campaign.  Apple's free iPhone 3GS campaign would run parallel with iPhone 4 price cuts as RBC Capital Markets analyst Mike Abramsky writes. 

While a $49 iPhone is already available (AT&T), psychologically a $0 iPhone provides a compelling offer, Abramsky said. Proprietary survey data... suggests 14% are very/somewhat likely to buy the iPhone 3GS for free with 2-year contract, exceeding buying interest for the iPad (13%) and original iPhone (9%).

Though the Apple brand has maintained its image for delivering high end products to high end customers, the pressure has been building for the company to consider looking into other avenues.  Google's Android has taken advantage of the midrange consumers by churning out devices for nearly all carriers and brands.  The Android is now holds the top smartphone position, snagging it from Apple's iPhone.

The iPhone 4S could entice prepaid smartphone customers while the iPhone 3GS caters to mid-range consumers.  The combination would provide a boost to Apple's marketshare and some footing into an Android filled jungle.  This won't be the first time Apple has reduced prices to sell out inventory.  The older models of the iPod mini, Shuffles, and Nanos were sold successfully along with their iPhone 3G and iPhone 3GS.

If the iPhone 4S was to be released, it may happen before the iPhone 5 due to delays of the LTE chipsets.  The iPhone 3GS is rumored to happen sometime in between. 

According to two sources, the iPhone 5 could be launched as late as mid 2012. 

We believe the iPhone 5 will launch in mid-2012, said BMO Capital Markets' Keith Bachman

Digitimes also claimed that iPhone 4S will not be launched until 2012.