We’ve previously predicted that Apple (AAPL) would cut the price of its original iPhone by $100, to $299, when it rolls out the new 3G version this spring. Now Fortune says that we were being too cautious: It says AT&T (T) will subsidise the price of the phones by “as much as $200”. Fortune:
AT&T is preparing to subsidise $200 of the cost of a new iPhone, bringing the price down to $199 for customers who sign two-year contracts, the source says. Apple is expected to have two versions of the new iPhone, an 8-gigabit-memory and a 16-gigabit-memory model with price tags widely expected to be $399 and $499.
AT&T and Apple declined to comment.
At $200, the iPhone would be within reach of a much wider consumer market and give AT&T a strong magnet to pull lucrative customers away from rivals like Verizon Wireless (VZ), Sprint (S) and T-Mobile (DT). The $200 rebate or subsidy would be limited to AT&T customers and not available through Apple’s stores. The new iPhone sold by AT&T will likely be locked or programmed so buyers can’t take the cheaper iPhone to another phone service…
The new iPhone is expected to be released on the one-year anniversary of the original iPhone debut June 27 or thereabouts. A few weeks prior to that launch, Apple is planning to stop supplies of the older model iPhone, according to the source. This will help clear out inventory and stir up demand for the new device. It will also attempt to avoid the public relations pratfall Apple made when it cut the price of the iPhone without warning last year. To soothe the ire among people who bought the iPhone just before the sudden markdown, Apple issued store credits.
A few details about the new iPhone have also been confirmed by the source. The new iPhone will be 2.5 mm thinner than the 11.7 mm original. The iPhone will also have a GPS chip for navigation and other location-based services.
What’s not spelled out in the report: Whether the price cut applies to the original iPhone (which would make sense) or the new 3G model (which wouldn’t). We’ve now read the piece a couple times, and Scott Moritz seems to be saying that Apple intends to dump the old model altogether, and that AT&T will subsidise the 3G model — a decision we find awfully puzzling.
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