The free 3GS was Tuesday’s biggest news

Hard to write about Apple today and it not be about Jobs, but something occurred to me as I sat at work waiting for BT to restore our Citrix connection. Is the free iPhone 3GS actually the biggest story out of Tuesday’s keynote?

Let me explain…

Last month my brother-in-law bought his very first smartphone. He’s not a nerd, so one of the biggest factors was price. He got an Android phone — a Samsung Galaxy Ace. I had a look at it and it’s pretty good and excellent value for around £20 a month (the handset was free with the contact). He had the choice between the Ace and the HTC Wildfire; a phone I’m no fan of (it’s slow and the screen is terrible).

The phone the Ace reminds me of is my wife’s 3GS. Same 3.5″ screen and I’m pretty sure a similar resolution. It’s a little laggy compared to the latest Android handsets (but not slow), and it’s very similar in design to Apple’s previous form-factor. The only major difference was the OS and that the Ace had a 5MP camera.

I wonder, if my bro-in-law could have had a free iPod totting iPhone 3GS on his low-price contract, would he still have plumped with an Android?

The 3GS is now the best deal if you’re looking for a low-end smartphone. You get a good phone with a great OS, and the best media software available — the integrated iPod.

Apple also wins big with this move. It gets to squeeze even more value out of an existing model. This is no new low-end SKU. There is no R&D development and no new components to source. It can squeeze its suppliers for even lower costs. And Apple can smash into the low-end market without scuffing its brand by launching a “cheap” iPhone. Genius.

Everyone wins.