They should buy a iphone 4s for $199+sign two year contract, sell it for $650, buy a used 3gs for $200 or like new one for $250, now they are $200 to $250 more money left in the pocket than the one who buy free 3gs with two year contract.
I think this is great, I know a lot of people that wouldn't get an iPhone because it cost money. They only look at the free phones. People don't know what they're missing until they have it.
This will get people in the door. I think it's good for Apple even if they make little to no profit on the actual phone, because people will still most likely buy some apps.
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I do