Rumor: Wal-Mart to sell 4GB iPhone for $99

Apple's existing iPhone 3G product line includes 8GB and 16GB models, which sell for $199 and $299, respectively, with two year contracts. A 4GB first-generation iPhone was briefly available last year for $399 but was discontinued only a couple of months later when the company restructured its offerings to focus on a reduced 8GB model in an effort to boost sales.

In a report Thursday, the BoyGeniusReport cites unfamiliar sources who say Apple may be prepared to introduce a 4GB iPhone 3G that it would allow Wal-Mart to sell for $99 alongside two-year contracts. The blog is unsure of its sources, however, and asks that readers "Just don’t hate us if this doesn’t happen, we warned you."

Last month, BGR cited an internal memo announcing "that Wal-Mart has reached agreement with Apple to offer iPhone 3G in Wal-Mart and Wal-Mart-managed Sam’s Club Connection Centers nationwide beginning December 28, 2008."

In total, approximately 2,500 Wal-Mart locations and 69 Sam’s Club locations that use the discount chain's ordering system are expected to carry the device. Training for Wal-Mart employees is believed to have already begun.

For their part, Wall Street analysts have recently issued reports supporting the theory of deeper-discounted iPhones in the near future.

Last month JRPG Research analyst Jamie Townsend said he expects Apple will be one of several smartphone vendors that will ramp up competition in the smartphone market by discounting their excess inventories immediately following the Christmas holiday.

Separately, Needham & Co. analyst Charles Wolf argued in an October report that Apple's strong real-world revenues and its high iPhone gross margins give the company substantial headroom to market a $99 iPhone that could lead to huge strides forward in market share.