Report: AT&T to subsidize next-gen Apple iPhone by $200, cutting price to $199

“When the 3G iPhone is introduced this summer, AT&T, the exclusive U.S. iPhone sales partner with Apple, will cut the price by as much as $200, according to a person familiar with the strategy,” Scott Moritz reports for Fortune.

“AT&T is preparing to subsidize $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-gigabyte-memory and a 16-gigabyte-memory model with price tags widely expected to be $399 and $499,” Moritz reports. “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… The $200 rebate or subsidy would be limited to AT&T customers and not available through Apple’s stores,” Moritz reports.

“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,” Moritz reports.

More in the full article here.

[Thanks to MacDailyNews Reader “Loyal Reader” for the heads up.]

True or not, the end result will be the same: Bloodbath.


  1. Subsidizing is the best way for Apple to really get this phone in the market and into the hands of the masses.

    Plus the phone is over priced.

    Blah Blah Blah I know all the features, its over priced.

  2. Doubtful. This sort of move is premature. This is someone wanting to publish misinformation or sell a story they didn’t feel like researching.

    3G model will sell like hotcakes already. No need for subsidies.

  3. upon further thought, it’s a canary trap. Apple’s done it previously right before a big announcement as a way of smoking out the leakers.

    Someone just lost their job, and not for having the right info, but having the wrong info that could be tracked.

  4. Considering how much 3G coverage ATT currently has, they would need to subsidize my upgrade to the new iPhone. No 3G in my area and I am part of the greater Los Angeles metropolitan area. As soon as they have better 3G coverage I’m there! I’ll pass my 1st gen iPhone down to my son or wife. This is going to be very attractive to new iPhone buyers. I assume that the 3G circuitry allows for slipping into EDGE mode when 3G towers are out of range. Anyone know for sure?

  5. I don’t think they are going to do that.

    @ iPhone Monkey: What you said is one reason they should avoid this whole subsidizing thing. What a mess. Apple is in the phone market to change it, not go along with the crappy business models that already exist…

    The iPhone should be treated as a small computer, since that’s what it is. For those that like the current mobile phone business model, go get a mobile phone… Don’t get a small computer that has a phone application on it, along with many other applications and expect the same deals on garbage you get from the service providers.

  6. Note that the article was written by Scott Moritz, formerly of but now at Fortune. No matter where he writes from, his credibility on anything Apple is suspect.

    That said, the $200 discount would work for me, as I don’t think AT&T;is any worse for me than T-mobile. But it seems like the $200 would have to be given back if you don’t finish your two-year contract, as I don’t see how Apple or AT&T;will be able to stop people from breaking the lock.

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