Apple apparently set to take the iPhone 3G below $100

Chicago (IL) – There is an interesting new rumor about a special edition iPhone 3G making the rounds on the Internet. Wal-Mart may be offering a $99 version of Apple’s smartphone later this month, reports suggest. Just don’t expect an “iPhone Nano” – this phone simply will have less memory, if the rumor is correct.

After retail giant Wal-Mart confirmed that it will start offering Apple's iPhone on December 28, there is now new information suggesting there will be a 4 GB iPhone that will be sold by the retail chain for $99 with an obligatory two-year contract. Boy Genius Report quotes unnamed sources who claim that a 4 GB iPhone for just $99 was part of the distribution arrangement between Wal-Mart and Apple. The same website is credited for leaking an internal memo that revealed iPhones will be sold at Wal-Mart this year, which was later officially confirmed by the retail giant. However, the $99 iPhone news should be taken with a grain of salt since the website is not willing to "put [its] stamp of approval behind this one."

Apple does not offer a 4GB iPhone at this time. A 4 GB model was only available when the first iPhone was introduced in June 2007, but Apple soon thereafter phased it out in favor of iPhones with more storage space. Some analysts are, however, supporting the theory of a $99 iPhone. JRPG Research analyst Jamie Townsend predicted that Apple, as well as other smartphone vendors, will sharply discount excess inventories right after Christmas. Needham & Co. analyst Charles Wolf said the hefty iPhone margin gives Apple ample room for additional price cuts, a move he believes might significantly boost the company's share of the smartphone market.

Despite the fact that 4GB of storage doesn't sound too impressive these days, the idea of a $99 iPhone may sound very appealing to some, especially to low-budget consumer segment that is not willing to spend more than $100 on a cellphone. Of course, the hardware price of the iPhone is just a minor portion of the entire cost of the smartphone. Most users may actually spend more than $100 every month on their voice and data plan as well as added taxes and fees.

Competition in the smartphone segment is heating up. the SonyEricsson Xperia X1, the BlackBerry Storm, T-Mobile's Android G1, the Nokia N97 and 5800 XpressMusic are all aiming for the iPhone and are closing the gap, which means that price reductions are just a matter of time.