The price of a 3G iPhone will be $199-$299 according to Steve Jobs, CEO of Apple Inc. (NASDAQ:AAPL).Â In order to support the lower cost of the iPhone, users will have to sign a 2 year agreement with AT&T.Â AT&T Inc. (NYSE:T) revised their deal with Apple to support this new price.Â Instead of sharing revenue for iPhone customers with Apple, AT&T will now have to “buy” iPhones from them and sell it for a lower price.
“The device is built, and priced, to sell,” stated Ralph de la Vega, the chief executive of AT&T Mobility. Tom Watts, an analyst at Cowen & Co. stated that it will cost AT&T $1 billion to subsidize the phone over the course of the year.Â AT&T is the exclusive supplier of the iPhone.
AT&T hopes that millions of customers will switch to their service and then sell their data plans at $40/month+.Â Sprint/Nextel, Verizon/Alltel, and T-Mobile better come up with something quick otherwise AT&T will poach their customers left & right.
 UPDATE: AT&T’s iPhone Shift To Cost Up To $1 Billion A Year by Dow Jones