iPhone's Killer Feature? PriceiPhone's Killer Feature? Price

Apple and AT&T continue their two-pronged assault on the mobile market with aggressive price points on the iPhone 4 and iPhone 3GS. With prices starting at $99, it puts Apple at a price advantage over competing models.The new iPhone 4 will be offered at the same price points as the out-going iPhone 3GS. The 16GB iPhone 4 will cost $199 and the 32GB iPhone 4 will cost $299. The comparable iPhone 3GS models were at those same price points.

AT&T is doing its best this year to avoid any confusion about who is eligible for those prices. This year, it has basically said that (nearly) all iPhone customers can upgrade to the iPhone 4 and still pay only the $199/$299 price points. (Full retail prices are $599 and $699, respectively.) That's much more generous than AT&T was last year, when it used some arbitrary scale to determine who was eligible and who wasn't. (It boiled down to how much users spent each month on their wireless bill.)

AT&T explained, "The reason we're doing it is we recognize the commitment our current iPhone customers have made to us. We listened to people last year and took steps to make the process better. And we built on it this year by expanding further the approach."

This move by AT&T does little to soften the blow it recently levied against smartphone customers when AT&T decided to alter its data plans. However, it will encourage current iPhone customers to upgrade sooner rather than later.

The $99 price point on the iPhone 3GS (8GB) is perhaps most compelling. The 3GS is a very solid phone, and it will get all the features found in iOS 4.0. That makes it a very good alternative for AT&T customers and eclipses the price points of many of the handsets in AT&T's arsenal. Only the data plan expense will keep people away, though AT&T thinks its $15-for-200MB option may be enough to convince people.

Though I am not a fan of AT&T's new data plan pricing policies, it's hard to deny that the low iPhone 3GS price and the allure of a $15 data plan might be the impetus necessary to drive more AT&T customers to the iPhone.