And if you read between the lines in Cookâ€™s comments on the prepaid market, he seems to be hinting strongly that Apple is going to soon pursue the unlocked market with a lower-priced no-contract iPhone. Maybe the iPod Touch goes away, replaced by a $249 or $299 no-contract iPhone?
I don’t see a contract-free iPhone replacing the iPod touch. In the Q&A after Apple’s earnings announcement Cook explains that contract-free iPhones are popular in geographies where credit systems aren’t as robust as they are in the U.S., Western Europe, Japan, Australia, etc. I think Apple might come out with a cheaper contract-free iPhone and target developing countries, specifically China and Brazil, two companies Cook mentioned as being largely untapped with potential for significant growth for iPhone sales.