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Tuesday, October 04, 2011, 11:48 am PT (02:48 pm ET)

iPhone 4 drops to $99 while Apple makes iPhone 3GS free with contract

As was rumored, Apple has opted to keep the iPhone 3GS alive as a free phone with a new service contract, while the 2010 iPhone 4 is now $99 with a carrier subsidy.

Both the $99 iPhone 4 and the free iPhone 3GS carry internal storage capacities of 8GB. The iPhone 4 is built on the custom A4 chip, while the iPhone 3GS, first released in 2009, is powered by an earlier, less-powerful ARM processor.

Both devices are still capable of running iOS 5, Apple's next generation mobile operating system, though not all of the features of the update are available for every device. The iPhone 3GS was previously sold for $49 with a two-year contract.

The 8GB iPhone 4 is a newly redesigned low-cost model from Apple. Previously the handset was only available in capacities of 16GB and 32GB, but it has been replaced at those sizes by the the new iPhone 4S, which is also available in a high-end 64GB capacity.

iPhone 3GS and iPhone 4