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Friday, November 18, 2011, 05:15 pm PT (08:15 pm ET)

AT&T bumps iPhone 3GS price to 99 cents

After making the iPhone 3GS free with contract last month, AT&T has now raised the price of Apple's two-year-old smartphone to $0.99.

The iPhone 3GS was originally announced as free with a two-year contract during Apple's iPhone 4S unveiling in October. MacNN reported on Friday that AT&T has now bumped up that price to 99 cents.

"iPhone 3GS is still available at an incredibly low price and we're confident consumers will agree that this remains one of the best deals for a leading smartphone," the company said in a statement.

The second-largest wireless carrier in the U.S. has been the exclusive seller of the iPhone 3GS since it arrived in 2009. Sales of the handset have remained surprisingly brisk even after more than two years on the market. According to the NPD Group, the iPhone 3GS was the second-best-selling smartphone in the U.S. during the third quarter of this year, behind only its successor, the iPhone 4.

The reason for AT&T's minor price hike remains unclear. In the past, Apple has, however, asked its partners not to advertise its products as "free" during promotions in order to prevent its brand from being diluted. It's possible that the iPhone maker had a change of heart about the iPhone 3GS deal and asked for a nominal fee to be put in place.

iPhone 3GS and iPhone 4


Another explanation could be the existence of an obscure accounting rule that would require a token payment for the device. For example, Apple in the past had to adjust its accounting of the iPhone to a subscription method in order to steer clear of laws and policies put into place after the Enron scandal. There's no indication that this is the case for the iPhone 3GS, however, and offers of free phones on contract have long been a practice among wireless carriers.

It has also been suggested that the new price is meant to curb overwhelming demand, but it seems unlikely that the extra $1 would deter many prospective customers.