Despite launching in June 2009, Apple’s iPhone 3GS is on track to account for as much as 20% of total iPhone sales in the current quarter, as the Cupertino-based company looks to compete with the huge number of low-to-mid range Android handsets available in the smartphone market, Sterne Agee analyst Shaw Wu has revealed in a report by Bloomberg’s BusinessWeek.

Apple announced it would slash the price of the iPhone 3GS to free at the recent iPhone 4S launch, meaning that consumers would simply have to take out a new contract to get their hands on what is now an entry-level iPhone device.

With AT&T selling out of iPhone 3GS stock when it made the price change, noting the “tremendous demand” at the time, Roger Entner, founder of market research firm Recon Analytics LLC believes that as “Apple can shovel them out by the millions,” consumers are going to choose the device because there isn’t a “free phone or even $50 phone is going to be more appealing to consumers than an iPhone 3GS”.

Apple’s iPhone 4S is expected to account for the vast majority of iPhone sales this quarter, purely because sales exceeded any other smartphone launch, with Apple seeing 4 million sales during its launch weekend alone. The company stands to profit from the subsidies that carriers offer their customers, also increasing its margins thanks to reduced component costs.

Wu notes that the “Apple of today is different from the Apple of even a few years ago. They’re aggressive on price. Not only do they have the best technology, but they have the lowest cost.”