THE NEW Apple iPhone 3G S, which goes on sale this Friday, will cost less than its predecessor, and those who bought the earlier model will be allowed to trade it in for the new handset.

Singapore Telecommunications (SingTel), the handset's exclusive local distributor, on Monday announced that the iPhone 3GS will be given free to those who sign up for its $205 a month mobile plans, while those on its new low-end $39 a month plan will pay $678.

Last August, SingTel sold the iPhone 3G for up to $848, and in light of how well it had done - it sold more than 100,000 iPhones - industry observers had expected that it would sell the new model for around the same price.

Another piece of good news: SingTel will offer iPhone 3G users who have been its customers for at least six months to upgrade their handsets. They will have to pay between $200 and $738, depending on plan and the handset. Their contract lengths will also be 'reset' to 24 months.

SingTel is also cutting the price of the 8GB iPhone 3G to $398, making it 'one of the lowest entry prices for touchscreen smartphones', said SingTel spokesman Chia Boon Chong.

While 'there are still a lot of iPhone fans out there' willing to pay any price for the latest Apple offering, Mr Foong King Yew, technology analyst firm Gartner's research director for carrier operations and strategies, said SingTel likely decided to lower prices in response to recession-hit pursestrings.

Meanwhile, the upgrade offer is to keep its original iPhone customers happy so they stick with it, rather than giving them a reason to switch to a competitor, something especially important for companies operating in mature, competitive industries like mobile telecommunciations, he said.

While the new handset is attractive, SingTel iPhone 3G user Lina Tan will take a pass.

'Next year Apple will launch yet another handset. I may as well wait until then when my contract is up, then change,' said the 20-year-old student.

'Anyway, from what I have read, it's physically identical and doesn't do much more than what I have already.'

Read Digital Life editor Grace Chng's blog on what to expect at the launch of Apple's iPhone 3G S this week.