Report: AT&T to sell 3G iPhone at US$200 discount

AT&T plans to sell the 3G iPhone for US$199 when it arrives in AT&T's stores in June, according to a report, in a sign that Apple may have given up on locked iPhones.

Fortune is reporting that you'll be able to buy a US$199 iPhone in AT&T's stores, and only in AT&T's stores, when the new model arrives around the one-year anniversary of the iPhone launch. The report says Apple will sell 8GB and 16GB versions of the new iPhone for US$399 and US$499 in its own retail stores.

This report, based on the word of a single anonymous source, raises no less than 28 zillion questions. My first thought is that if this is true, the only way Apple would go along with its partner's intention to dramatically undercut its pricing would be if Apple plans to sell unlocked iPhones in Apple stores.

Apple seems to have acquiesced to the demand for unlocked phones, embracing the development as a sign of strong iPhone demand on its last earnings conference call. It also has not updated the iPhone firmware since February, even though the hacking community broke that update almost instantaneously.

So, if Apple was ready to embrace the unlocked model, AT&T would need a way to keep people locked into two-year contracts. People would then be able to choose between more expensive, unlocked phones or cheaper, locked models. This would probably mean an end to the revenue-sharing agreement between the two companies, though, as it would obviously end the exclusivity arrangement.

However, the report says AT&T has figured out some way to lock the phone directly to its service. How? If Apple can't do that, how is a carrier going to do it?

That brings up another possibility, that more than one iPhone is in the works for June. We've seen conflicting reports about whether the new iPhone would be slightly thicker or slightly thinner than the current model, and having two iPhones out in the wild would help explain those reports.

Presumably, AT&T's might come with the glossy black plastic chassis reported by Engadget with some sort of changes to the hardware (perhaps making it thicker) and software to close the loopholes exploited by iPhone hackers. While Apple would continue to sell the traditional design as a slimmed-down unlocked phone, for the higher price. Or maybe Apple gets the black version, it doesn't really matter: having more than one variety of iPhone has been a persistent suspicion since the first one was introduced last year.

Fortune didn't exactly distinguish itself with its BlackBerry report from last week, so I'm not exactly sure what to make of this one. With two months to go, I'm sure this won't be the last unconfirmed iPhone report.

(Originally posted in "One More Thing" blog at CNET News.com)