"Apple would first need to address the entry-level price point before introduction of a $99 iPhone," says Cote.
Apple fans will recall last year AT&T lowered the price of the iPhone to $199 from $400 by subsidizing a big portion of the sales price. The price cut juiced iPhone sales to 17 million last year, that's well above the 4 million iPhones sold in the last six months of 2007.
The price strategy also highlights efforts to forestall the end of a strong two-year run for the iPhone. Entering its third year, the iPhone hits a phone fashion milepost where cool designs start to look a little uncool.
Apple also faces a new smartphone assault from Research In Motion (RIMM), which seems to be hitting its stride after initial stumbles in the consumer market. And old foe Palm (PALM) has a new touchscreen Pre phone to rival Apple's iPhone coming this summer. And later this year Nokia (NOK - Get Report) promises to jump into the touchscreen race with three smartphones.AT&T may be firing the first shot in the coming price plan war.