Fortune's Techland blog is reporting that a source close to Apple is claiming that the upcoming 3G iPhone will be sold at a $200 discount by AT&T... if you sign up for a two-year contract. In other words, standard rugby for cell phone companies... sell the phones cheap or give them away for free, then make your money back from a subscription.
Interestingly, the source claims that you won't be able to get this deal from an Apple store, but only from AT&T directly. Also, it'll be locked so you can't take it to another carrier... or will be for about five minutes before the Internet figures out the newest way to hack it.
All the other usual rumors are confirmed by the source: early June, 3G and GPS. They will still apparently come in only 8GB and 16GB flavors, although that seems a bit hard to believe to me, given the iPod Touch comes with up to 32GB. Finally, in keeping with Apple's design philosophy, if you can't figure out a way to improve its looks, make it thinner: the 3G iPhone will allegedly be 2.5 mm thinner than the original.
Take with the usual grain of salt, but it all parses.
AT&T to cut the price of Apple's New iPhone [Techland]