Businessweek: AT&T lowering iPhone costs

Echoing an earlier rumor, Businessweek is now saying that AT&T is ready to reduce prices on iPhones.  They see the long-rumored $99 price point for iPhones and lower tiered wireless plans.  The cost will be made up for by the iPhone's cheaper hardware, resulting in a lower subsidy by Apple.

New devices may cost as much as one-third less to produce than earlier versions, Doherty says. The cost of touchscreens, the most expensive component, has declined by more than 30% in the past year, estimates Michael Cote, an analyst at consultant Cote Collaborative Wireless Strategy.

They have a source with knowledge of the situation:

The exclusive U.S. iPhone service provider is considering cutting the price of its monthly service package or offering a range of lower-priced plans, say people with knowledge of the company's thinking. One plan that could be introduced as early as late May would include limited data access at a $10 monthly reduction, the people say.

Late May would be a way to get rid of excess inventory of 3G iPhones as well.  We're not sure "limited" data access would be something that Apple would want as part of the experience.   Perhaps they mean they are disabling the 3G radio and only allowing EDGE?  2007 tech at 2007 prices!

Remember, we've also heard from the WSJ that AT&T is going to raise prices...

While we'd love to see some better AT&T plans, we have a few issues with this.  First of all, we've been hearing things like better camera and digital compass (along with other stuff we haven't heard) are coming to the iPhone, which would negate some of the cost savings on hardware.  Also, as the Wall St. Journal said, AT&T doesn't have much room for pricing changes.  iPhone use data more like a computer than like a phone.

In related news, AT&T today claimed it had twice as many smartphones on its network than any other carrier.