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Apple May Juice AT&T with $99 iPhone

With Apple's new mystery iPhone due this summer, the current model may get the half-price treatment, which equals gravy tor Ma Bell.



) -- How huge was


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? Just ask


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The scorching-hot iPhone accounted for all of Ma Bell's wireless postpaid subscriber growth in the first quarter. And

wireless growth carried an otherwise limping AT&T


The iPhone not only helped boost wireless data revenue by nearly $1 billion in the quarter, it salvaged what would have been a dismal subscriber performance among non-iPhone customers.

AT&T activated 2.7 million iPhones in the first quarter with about a third of those customers switching from another carrier to AT&T to get the phone. However, the company added a mere 512,000 postpaid or contract customers, below analysts' estimates. This was the second quarter in a row where non-iPhone users have marked a decline.

Is it time for Ma Bell to panic about a future without Apple iPhone exclusivity -- and with the prospects of a

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Verizon iPhone

? Not just yet. Consider these two developments:

The arrival of the redesigned mystery iPhone this summer.

The $100 price tag on the iPhone 3GS.

"It was a very strong quarter for AT&T," says Nielsen analyst Roger Entner, referring to the broad improvements in nearly every wireless category from margins -- up two percentage points to 44.5% -- to average sales per postpaid user, which jumped 4% to $61.89.

It's no secret that the iPhone has been a key to AT&T's wireless performance. One thing that stands out, says Entner, is that demand for the iPhone 3GS has not yet reached a plateau like the previous iPhone did two quarters after its introduction. "It goes up, and up and up," says Entner.

That pattern will likely continue when Apple and AT&T announce a new iPhone and cut the 3GS to $100 like they did last year with the 3G phone when the 3GS arrived.

"The precedent was established when they cut the price in half last year," says Entner.

At $100, the popular iPhone undercuts archrivals like


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Android phones by half. Not a bad weapon in the

great smartphone challenge of 2010


AT&T's Apple iPhone exclusive may vanish next year, but for now it's making all the difference.

--Written by Scott Moritz in New York.


>>AT&T's Wireless Gains Offset Core Woes

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>>The Apple iPhone's Top 5 Challengers

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