AT&T quietly and unexpectedly raised the price of the iPhone 3GS on Friday, as noticed by MacRumors. While it was previously free when subsidized with a two-year contract, the cost has now been increased to a bank-breaking $0.99.
The iPhone 3GS is the lowest-end iPhone model offered by AT&T. This move is curious considering the negligible new price tag - not even a whole dollar. There is also the fact that AT&T Mobility CEO Ralph de la Vega previously bragged about the $0 price during AT&T's Q3 2011 earnings call with analysts that took place on October 20. During his introductory remarks, he made the following statement: "Our lower price plan continues to be a good entry point for many subscribers and now that we offer a free iPhone with a 2-year contract for the first time ever, the iPhone 3GS, we expect to broaden the smartphone base even more."
De la Vega mentioned the free price point again during the question-and-answer portion of the call. "I also mentioned in my notes that we have another device that I think is going to dramatically change those people that are on smartphones and quick messaging devices, the 3GS, which is free with a 2-year contract. We've seen a tremendous, tremendous demand for that device even though it's a generation old. And actually, we're getting more new subscribers coming on the 3GS on the average than other devices."
Maybe demand for the iPhone 3GS has decreased to the point that offering it at a free incentive price is no longer necessary or viable. Either way, savvy shoppers can still save a dollar (minus one cent) at both Apple's and Best Buy's online stores... Oddly enough, both through AT&T subsidies.