3G iPhone to cost $199?

Again, you don't know what you're talking about. There would be no reason for anyone to do this. Apple is not going to allow AT&T to discount their own phone, when it would cannibalize sales from Apple stores (where most iPhones are sold), who aren't going to discount it either.

Since the iPhone requires activation via iTunes, there is no way that AT&T could force anyone into a two year contract in return for subsidizing their phone purchase. Nobody wants to wait in line for 30-45 minutes during the tedious "activation" process that is normal for all other cell phones, which is why activation via iTunes is a stroke of genius for Apple. It allows them and AT&T to concentrate on the selling of phones, lets customers activate painlessly over the Internet, and choose the plan of their choice.

Apple is not about to change that, and AT&T can't get around it, so you might as well stop listening to baseless rumors from so-called tech journalists who have no clue or insight. Nothing to see here, move along.

If this is true, bye-bye Verizon...for sure!

"This rumor doesn't seem too outlandish to me"

You can't be serious.

Scott Moritz (Fortune) has absolutely no credibility.

someone told me that in order to get an iphone, you have to have an *individual* contract on AT&T. I do a "family" plan with my wife, and want an iphone. Can anyone confirm or deny this? I want to keep the family plan discount going while still having an iphone.

I think some of you guys are missing it. The price wouldn't be set at 200 bucks, it would be 400 or 500, and the ATT stores would offer a rebate of 200 dollars. Whether its instant or mail-in, and whether or not 1st gen iphone users could obtain the same deal, (maybe if we re-extended our contract by another two years), is yet to be decided, IF, this is even true.

According the Fortune Magazine it WILL be the 3G version for $199.

sure, pigs might fly...

I feel like the only way this would happen is if the phone is severely gimped in other ways (limited to 8 GB model)...I mean, I'd love to see it, but I just can't imagine it happening.

It is conceivable that Apple heavily subsidize the iPhone in an effort to gain add-on sales, such as music downloads, movie purchases/rentals and application sales through iTunes. The phone could be considered more of a vehicle for future purchases, with heavy margins, than a profit generating item by itself.

In other words AT&T will start subsidizing the iPhone? As long as I can upgrade to the next version with no penalty, I am in. At that price, I could sell my old iPhone unlocked for $200 and upgrade for no cost. Suhweet!