The rumor mill and predictions around an Apple iPhone Lite are still going strong. Today according to Forbes, analyst Mike Abramsky with RBC Capital issued a note predicting to offer the iPhone 3GS for free with contract in the United States. Right now the iPhone 3GS is selling for $49 w/ contract. The free offer would double Apple's global market opportunity and re-accelerate iPhone market share growth outside of North America.
I am not sure about this. In Europe the iPhone 4 is already offered for free in many countries when you choose the highest contract. Free is not that unique. If Apple wants to make headway in the budget smartphone segment than they need a compelling pre-paid offer. If Apple would offer the iPhone 3GS for under $300 unlocked this would drive dramatic sales around the world.
But then I still not sold on the idea that Apple is going to aggressively enter the budget phone market. I can imagine it more with the old 3GS, but not with a new designed iPhone Lite.