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Fortune Magazine has suggested that US telco AT&T, which has an exclusive five-year deal to sell the iPhone in the US, is prepared to sell the device for as low as $US199 for customers who sign a two-year service contract.

200805010431411da9e 200x150 Apple To Release $199 iPhone
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courtesy:www.mobilewhack.com

Such a discount would cause a massive surge in demand and at last count, Apple had sold some 5.4 million units, the vast majority of them for AT&T’s network, even with price tags of $US400 to $US600.

With less than two months to go before Steve Jobs takes the stage at Apple’s Worldwide Developers Conference, where he’s expected to unveil a new iPhone, it appears that AT&T may not be convinced that new bells and whistles will be enough to get droves of new customers to switch from other wireless carriers.

So after a year of creating a new wireless business model by selling the iPhone at premium prices, the US’s biggest phone company may yet resort to the oldest trick in the book: huge discounts.

This news goes hand in hand with rumors in recent weeks that Apple is considering selling the iPhone in Australia that would work with multiple carriers, although it is highly unlikely that it would be in the sub $200 range.

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