Will a $199 Price Tag Debase the iPhone?

Scott Moritz of Fortune magazine reported that when Apple releases its 3G iPhone this summer, AT&T will slash US$200 from the price tag with a two-year contract.

The deal has sparked intense debate in the Apple community, ranging from those who don't believe the phone company will offer the rebate to those who believe Apple has decided to release an unlocked phone, breaking its exclusive deal with AT&T.

The Nuclear Option

Apple fans were ecstatic when the first AT&T-enabled iPhones hit the market last year, despite the hefty price tag. Customers lined up at stores hoping to get their hands on one of the cherished products.

Not everyone was completely taken aback.

Developers in particular weren't happy that the product didn't have a software development kit (SDK), which allows third-party developers to build applications for the system.

With a new 3G iPhone on the way this summer and an SDK set for release around the same time in June, there is speculation that Apple is ready to address those concerns.

"I read this as Apple is going to have a $399 and $499 phone, and AT&T will have a subsidized phone for $199," said Fabrizo Capobianco, CEO of Funambol, a Redwood City, Calif.-based mobile e-mail application development company. "What it means to me is that there will be an unlocked phone for $399 and a locked phone for $199. I don't see how it can be any other way."

Capobianco, who sits atop an open source iPhone development community, told MacNewsWorld that he thinks Apple has stabilized the iPhone's hardware and software, and now was ready to both open up application development and mobile service providers.

A Tamer View

Others, though, say the rumors about a discounted 3G iPhone this summer are unfounded.

Instead, the original 8 GB iPhone will likely drop in price as its lifecycle draws to a close, much like its European counterpart, Rob Walch, host of the Today in iPhone podcast, told MacNewsWorld.

Walch said he expects the 16-gig iPhone to drop to $299 and the new 3G iPhone to hit the market at $499, a price more in line with the original iPhones.

The reality, Walch said, is that Apple is most likely not going to push its 3G phone to market as it did with the original iPhone.

"All this is just speculation, but just as accurate speculation as that from the Fortune article," Walch said. "All the speculation of a June launch of the iPhone is overly optimistic wishes of those that want the 3G phone."