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August 5, 2009 10:27 AM PDT

Is a $99 iPhone 3GS coming soon?

by David Carnoy
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(Credit: The Boy Genius Report)

Ever since Apple launched the new iPhone 3GS, the older iPhone 3G has been going for $99 with a new two-year contract. Well, according to Boy Genius Report, there seem to be some indications that Apple may be about to bring out a new 8GB version of the iPhone 3GS that will take the place of the iPhone 3G and also cost $99.

Interestingly, BGR's source isn't AT&T but Rogers, a Canadian carrier, and a tipster sent the site some screenshots that seem to provide proof of the transition between models. None of this is confirmed, of course, but if AT&T (and other carriers like Rogers) offered an 8GB iPhone 3GS for $99, it would be another aggressive move by Apple in its quest to dominate the smartphone space. I'm not sure it spells doom for the $199 8GB Palm Pre, which is selling well, but it can't help its cause.

Comments? Is the 8GB iPhone 3GS at $99 a big deal?

(Via The Boy Genius Report)

Hunkered down in New York City, Executive Editor David Carnoy covers the gamut of gadgets and writes his Fully Equipped column, which carries the tag line "The electronics you lust for." He's also the author of "Knife Music," a novel. E-mail David. Follow David on Twitter.
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Add a Comment (Log in or register) Showing 1 of 3 pages (76 Comments)
by lmshahft August 5, 2009 10:35 AM PDT
I'd consider it a little more seriously if I end up getting a new phone. My major reservations for delaying the purchase of an iPhone...1) I wanted a phone that could record video (like my current Nokia N75) and I didn't want to pay $199 for that capability ($99 is more tempting). 2) I don't want to pay $30 a month for a data plan. 3) I balk at paying $5 more dollars for text messaging when a data plan should include text messaging because text messaging is data.
Reply to this comment
by IBEJohnson August 5, 2009 5:03 PM PDT
Actually, technically speaking, text messaging isn't data -- It travels over the voice network.
by pixaround August 5, 2009 7:06 PM PDT
sms uses control line not voice
by b_baggins August 6, 2009 1:07 PM PDT
iPhone 3G. Jailbreak. Cycorder.

Video recording problem solved.
by cvaldes1831 August 5, 2009 10:46 AM PDT
It will probably encourage a few who are ready to switch, but if you amortize the $100 savings over a two-year contract, you're just saving about four bucks per month, the price of an espresso-bar drink.

As an AAPL shareholder, I'm all for increasing sales, as long as it doesn't erode Apple's margins.
Reply to this comment
by talking poo August 5, 2009 11:16 AM PDT
Just like many businesses, you don't make money on the main event, but the peripheral products.

For example Movie Theaters and ball games rarely make money selling tickets, but on the overpriced concessions. Same with restaurants, lucky if they profited on the main entree, its desserts and drinks where they make their killing.

Since the opening of the Apple store, along with iTunes its in Apples best interest the gain market share, b/c the real money is in being a broker for other ppl to get there products to the masses.
by cvaldes1831 August 5, 2009 6:39 PM PDT
This is incorrect.

Unlike most of its competitors, Apple uses software and content (the iTunes Store, the App Store) to drive sales of its high-margin hardware. They count on making money on the main event, not on peripheral products.

Apple gets a massive subsidy from carriers for its iPhones (like $300-400 per unit).
by make_or_break August 5, 2009 11:28 PM PDT
The apps and media content from iTMS IS peripheral product. Plus the profit margin from the iPhone is more than Apple's percentage from software and media content sales...I understood that they also get a chunk of that monthly fee AT&T (and probably other carriers abroad) charge. I don't believe that's the normal, traditional phone subsidy, but was actually negotiated separately as the price of being the exclusive carrier for a given market.

Face it, when it comes to the wireless phone racket the phone itself--whether high-end smartphone or basic handheld--is actually the cheap part of the agreement. It's there to foster the meat of the profits...paid each and every month for a MINIMUM of two years. The mandatory 2-year commitment is where the REAL profit lies for cell phone service. Apple simply augments that piece of the pie with their cut from App Store and iTMS media content sales.
by B. Thayer August 5, 2009 10:54 AM PDT
Nope. Won't make a lick of difference as long as the iPhone is an AT&T exclusive. Their service is horrid around here, and since they've merged with Cingular they eliminated the 'worst' carrier and take spots 1 and 2. T-Mobile is a close 3rd in worst service in this area.
Reply to this comment
by steel36 August 6, 2009 4:53 AM PDT
Here Here.
by yleme August 6, 2009 12:20 PM PDT
In Dallas, AT&T is, IMHO, better than Sprint, and since they amplify the signal throughout the inside of the two hospitals I work at, switching from Sprint to AT&T was just that much easier of a decision. Not to mention the phone is pretty damn impressive!
by errantboy August 5, 2009 10:57 AM PDT
The iphone may as well be free. It's the plan that's too expensive.
Reply to this comment
by agrawal2 August 5, 2009 11:19 AM PDT
completely agree... I think few people realize that the true cost is in the monthly plan, not the initial cost.
by hynguyen02 August 5, 2009 11:32 AM PDT
iPhone 3GS for $99 is an excellent deal. Even at $199 for an 8GB is not that bad too. It is with ATT that I didn't get the phone. C'mon unlimited text is another $20 on top of $30 for the data plan. Are the kidding me??? With Sprint, the data plan is $30 WITH unlimited text. Also, ATT free minutes is after 9pm where as Sprint is after 7pm. If you do the math, that is a big saving there! I am so glad I got the Palm Pre with Sprint as the carrier. The phone is such a joy to use.

Don't get me wrong, I love Apple stuff. I own an iMac and a Macbook Pro.
by DonJuan4565 August 5, 2009 1:50 PM PDT
You're soooo right! That's the one reason I haven't gotten an iPhone. AT&T is a total rip off. I'm getting an iPhone as soon as it gets untied from At&T.
by outdoor_gal August 5, 2009 1:59 PM PDT
I agree. The data plans are just too expensive, and you have to add a text plan on top of that. Cheap smartphones are nothing without a reasonably priced data plan.
by dilchien August 5, 2009 5:20 PM PDT
Why do you think the data plan cost so much? The profit's not ALL going to ATT. Apple's keeping a significant portion of it. If the Iphone goes to Verizon or something, the plan'll either be still the same price or the phone'll be more expensive. Apple's gotta make a killing somehow.
by cvaldes1831 August 5, 2009 6:41 PM PDT
@dilchien:

Apple gets an outright subsidy from AT&T (about $300-400 per phone). They no longer get a cut of the subscription fees.
by Cassnet August 5, 2009 11:02 AM PDT
The $99 is a subsidized price from AT&T. I don't think it cuts into Apples profits at all.

I'd be interested to know if I can switch my 8gig 3G for a 3GS or if I have to wait for my contract to be up.
Reply to this comment
by C0mmanderB0nd August 5, 2009 11:15 AM PDT
So reading between the lines after apple clears out the old 8GB 3G, they want to continue selling a "$99" phone so here comes the 8GB 3GS.

Hard to say if it will hurt profits though, if it cannibalizeds the $199 phones it could be selling then maybe, but I have a feeling all the extra sales they pick up will more then make up for it.
Reply to this comment
by clrgj2 August 5, 2009 11:19 AM PDT
Then I guess you can wake up another day with espresso-bar drink!!
Reply to this comment
by vageekgrl August 5, 2009 11:25 AM PDT
I still won't go to the iPhone, not with AT&T. There service is non existant here.
Reply to this comment
by edcase512 August 5, 2009 11:28 AM PDT
Until devices become carrier independent, this is a non story. No device is worth dealing with AT&T.
Reply to this comment
by tmcdanne August 6, 2009 9:46 AM PDT
Agreed, Verizon is by far the better carrier in the Philly/North East area. Untill I can land this phone on a Verizon plan, I'll stick with my blackberry.
by b_baggins August 6, 2009 1:09 PM PDT
Buy an unlocked Phone, then.

Oh, wait. You want a carrier subsidized phone AND a carrier independent phone.

You also probably think that rich people should write you checks. Just because they're rich.
by InkyRed August 5, 2009 11:31 AM PDT
i love my iphone!
Reply to this comment
by stigmattaman August 5, 2009 11:35 AM PDT
Apple's been a hardware company though, as the music and stuff through iTunes has been somewhat of a loss leader to sell high-margin hardware.
Reply to this comment
by inter7777 August 5, 2009 11:48 AM PDT
I can't believe people are stupid enough to think a $99 Iphone is a good deal. You are paying MINIMUM $70+tax per month for 2 years. And you care/make a big deal about saving $100 off the sticker price?? Owning an Iphone costs $1880 +tax to own for 2 years!! And that's with the MOST basic plan. I got an LG Incite for free and I pay the voice plan with NO data plan (I don't need it). Sure it's not an Iphone, but it saves me $1000. How about offering the Iphone with no data plan?? I just use my cellphone to make calls (it's a phone after all) and don't need the $30 extra a month for data where WIFI is available everywhere I go.
Reply to this comment
by Xenovic August 5, 2009 1:56 PM PDT
I don't mean to be rude, but you are not really the target for this device.
The iPhone was designed to be a "data" phone. If you don't need "data" AT&T doesn't believe you need an iPhone.
Now, that may or may not be the case, but as far as the value to AT&T, your less expensive phone plan isn't worth what they are willing to subsidize on the cost of the phone.

For some of us, this is important news because we were already willing to pay for a data plan. So, if I'm already going to pay for data, getting a certain price on a phone is good (or bad).

I have a Palm Pre and I'm on Sprint. Why?
1. I can't get AT&T service in my area.
2. I liked the Pre better than any of the alternatives.
3. I save about $30 monthly through Sprint over getting an identical plan through AT&T
by frozenjello August 5, 2009 4:36 PM PDT
You are basically balking at the $30 monthly cost, which I agree is not trivial. On the other hand, I actually agree with having a mandatory data plan. Sure, WiFi may be available at your house, workplace, coffee shop, and other places you are familiar with, but once you are in an unfamiliar area, free WiFi suddenly seems scarce. The always-on 3G data plan truly "is available everywhere I go". For example, I often check the traffic on Google maps WHILE I AM IN MY CAR so I can take the least congested freeway.
by tmcdanne August 6, 2009 9:52 AM PDT
@frozenjello
you might be the only iphone user that has the 3G network, "available everywhere I go". Thats the main reason I can't buy this phone. The coverage area is beyond horrible. Sure, you might not have Wifi in most places but AT&T's 3G networks is pretty scrace as well.
by heygeo August 6, 2009 10:50 AM PDT
@Xenovic
I think the point that inter7777 makes is that iPhone although popular is niche, as you pointed out if you dont use a data plan then iPhone eliminates you as a customer. So why doesnt Apple offer a iPhone with no data requirement but allows you to use wi-fi? the answer to that is that if you compare the iPhone on its own merits as a DEVICE (not the apps others have written to make up for its shortcomings) to other newer smartphones, its not that great.. the iPhone may have started as a cool phone but now by design its a mobile platform for their apps store thats really it... people have lost sight that the iPhone stopped being a phone a while ago.. its a palmtop.
by frozenjello August 6, 2009 4:05 PM PDT
@tmcdanne
I can see your point. Being forced to buy the data plan even if your area has no AT&T 3G coverage is rather insulting. The coverage is pretty good here in the San Francisco Bay Area.

@inter7777
I think the data plan is mandatory because of 2 reasons:

1) It is a cash cow for AT&T. The average iPhone bill is much higher as compared to other phones. Cha-ching! They signed up 800,000 new iPhone subscribers last quarter in spite of the data plan's $30/mo cost. The telcos covet these "higher value" customers.

2) The smartphone experience is greatly enhanced with a data plan. Most people before 2007 didn't bother buying data plans for their smartphones (unless their company paid for it), so the phones' capabilities just weren't that impressive when away from WiFi. On the other hand, ALL first generation iPhones had a mandatory data plan, making it a truly gee-whiz device that impressed everyone with its ability to beautifully render (most) web pages anywhere you had cell reception. Every iPhone behaved consistently; thus, an icon was born. The unlimited data plan also encouraged lots of web surfing, and soon most people, like me, couldn't imagine living without data. I agree with AT&T and Apple: the mandatory data plan is a vital part of the iPhone experience.
by SFlawgirl August 7, 2009 12:37 AM PDT
I have a blackberry and the MANDATORY minimum data plan is $35 a month and I got the phone for free. Sorry but I am not sure why everyone is up in arms over the iphone data plan. Blackberry has been doing it for years! This is nothing new to long terms users of various smartphones.
by The_happy_switcher August 5, 2009 11:49 AM PDT
Palm is going to hate this news.
Reply to this comment
by pithenumber August 6, 2009 4:02 PM PDT
AT&T is still horrible

its worth an extra $500 at least not to use AT&T

and in the end after you consider monthly fees, the Pre is still way cheaper
by bmccorm2 August 5, 2009 11:57 AM PDT
I think there is a consensus with most comments here: the iPhone is THE phone to get. There is no denying the capabilities and appeal of the iPhone; ATT is clearly holding it back. I am in the same position as most others and would love to get an iPhone, however ATT is just not practical. In my area it is ATT vs. Verizon, with ATT being at LEAST $20 more expensive per month (not to mention the spottier coverage). The choice for me is clear: wait for Verizon to get the iPhone.
Reply to this comment
by karcg August 5, 2009 2:47 PM PDT
Totally agree. I'm jealous of my friends with iPhones but can't stomach the AT&T fees and service. Come on Verizon!!
by IBEJohnson August 5, 2009 5:15 PM PDT
I'm not sure I get this. Has anyone bothered to look at AT&T pricing vs. Verizon? They're identical. If you want to throw Sprint into the mix and claim their prices are better, then you have an argument. But all these people clamoring for Verizon and using the pricing as their main argument apparently haven't bothered to compare the two company's prices.
by SomeGuy47 August 5, 2009 12:02 PM PDT
The biggest problem with a $99 3GS is trying to figure out whether to get 8 GB or 16 GB... this will be very bad news to Apple's competitors, like Palm, who only have one touch screen device to offer. Even if the profit margins on a $99 3 GS are low(er), they would be made up by:

1) Volume - For someone who does not have 32 GB of music and movies to put on a phone, buying all of that extra space would be a waste. Now, you can have the speed of an iPhone 3 GS and just enough space for a smaller collection.

2) The success of the 16 GB and the 32 GB this summer gave Apple a lot of elbow room to corner their competitors.
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by benjimen August 5, 2009 1:00 PM PDT
You're just talking about music & movies. While you may not take 'data' into consideration, many will once they discover the AppStore. Much of what you can get won't take much space, however, GPS products, advanced gaming, etc., all start eating away at the space.

Personally, I think it's always good to consider what you >might< do with a device as opposed just what you want to do with it at purchase.
by megustansalchichas August 5, 2009 12:10 PM PDT
yeah why not? they'll more than make it up from their cut of sudoku and doom, etc
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by phineasfogg August 5, 2009 12:33 PM PDT
I love my iPhone. I hate my AT&T phone service. If I stay with AT&T would now get the 8g 3GS for $99 as I don't have great need for more memory. If AT&T ticks me off any more will dump the iPhone, get an iPod Touch and a cheap Verizon cell phone or likely one of those "pay-as-you-go" throwaway phones as my average minutes used per month is 200-250 minutes and I don't use texting, just email, iChat and Yahoo-Messenger.
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by PeteyBrian August 6, 2009 3:35 AM PDT
I have a cheap Verizon phone with family plan for years. Visited Asia for 6 months - my notebook was down - and decided to buy a smartphone overseas (Verizon phone a paperweight overseas) which I could later use in the US. Bought an iphone 3g 16gb for $740 unlocked and jailbroken with no plan in 08. Amazingly cheap to operate data/phone in Asia - $2-$3 for 40 hours of data and approx. $20 per month or so on weekly US calls and unlimited local calls!!! I come back to the US to realize that $75-$105 per month is the norm for AT&T service/data - granted, I could then sell my new iphone on EBAY to help reduce this cost but a hassle to me. Considered T-Mobile for $55/month for minimum plan, but the reason to get an iphone is the speed of the network - and 2g was slow for Slingmedia device etc. I've decided to use my iphone as a glorified iTouch/backup phone - and use AT&T pay as you go plan for backup calling and data on wifi only. Carry 2 phones with me...
by brakedance6 August 5, 2009 12:35 PM PDT
I think a $99 3GS would be all I need to finally dip a toe into the ever-growing waters of smart phone usage. I've been scouring the internet for a smart phone that has wifi, a standard headphone jack, and is on a good (to use the term loosely) network like *cough* AT&T *cough* *cough*. If this were to come out, I would go pick one up the same day I heard the news. Right now the only thing stopping me from doing this with the 3G is the lack of turn by turn navigation and voice commands.
Reply to this comment
by PeteyBrian August 6, 2009 3:51 AM PDT
Tom Tom should be coming out with a package for turn by turn navigation - I'd hope that this would be a one time cost... If it's a monthly service fees, forget it!

I'd like the iphone 3g to get Apple video (I'd be willing to pay for it in app store), but Apple wants 3gs sales... Until then, just sucky jailbroken video players...
by santellan17585 August 5, 2009 1:04 PM PDT
With the steep cost of my early termination fee with Verizon, a $99 iPhone 3GS would make me take the jump to AT&T and a new iPhone in no time!!!
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by ywkhgqo August 5, 2009 1:41 PM PDT
if you're going from verizon to AT&T, i feel sorry for when you realize how much worse than network
by ThatIsWhatSheSaid August 5, 2009 1:14 PM PDT
I've always found it interesting that in the UK many phones are free and the monthly fees are still in the realm of $70 (yes, dollars, not pounds) with unlimited texting and data. They don't give you as much on minutes, of course, as Europe embraced smart phones before the US did. This doesn't work in all cases, as the iPhone is never free, but the prices are genuinely much less for the phone and with similar or slightly cheaper monthly plans.
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