$199 3G iPhone

Reports indicate that AT&T may offer a $200 rebate on a 3G iPhone to be released this summer in the United States. This is interesting news as AT&T was not willing to discount the iPhone so far. This indicates that either there is pressure to increase iPhone adoption or AT&T is trying to create stickiness in case Apple has negotiated an agreement to sell an unlocked iPhone to the public.

Note that this $200 rebate will be given if the customers sign a 2 year contract or renew existing contracts. The $399 list price is for the 8GB iPhone. The 16 GB cousin goes for $499 and may get a $200 rebate as well on a two year contract.

This strategy may help accelerate migration of customers from competitors like Verizon, Sprint and T-Mobile to AT&T.

Unconfirmed rumors also indicate that the other GSM carrier in USA, T-Mobile is turning on its 3G voice network in segments in next few days. There is only a voice rumor, 3G data may not be enabled yet on T-Mobile USA network. Even it was, the frequency T-Mobile is using is different than that of Apple iPhone / AT&T 3G frequency. So it is quite likely that the unlocked 3G iPhone will not work (in 3G mode) on T-Mobile 3G network (it may work on 2.5G / EDGE band of T-Mobile network though). Then the only audience for the unlocked 3G iPhone are folks who buy it and take it abroad for use on GSM networks in other nations. The whole T-Mobile story is a based on rumors so take it with a pinch of salt.

Average iPhone user spends $100 per month due to a higher priced data and voice plan. So AT&T can recoup the $200 iPhone rebate from a customer in no time.

The 3G iPhone comes almost on one year anniversary of the original iPhone. It is a fascinating device, to say the least. It has opened up new business models in mobile space by converting a bland mobile device into a personal portable computer. We continue to salute Apple for its innovation and creativity.

MT