AT&T Inc., the exclusive U.S. carrier for Apple Inc.’s iPhone, will begin selling the device without a contract for the first time.
The 8-gigabyte model will sell for $599 and the 16-gigabyte model will go for $699, AT&T spokesman Mark Siegel said today in an interview. The offer, available March 26, will let customers sign up for month-to-month plans with Dallas-based AT&T.
Until now, AT&T has required a two-year contract for iPhone buyers, charging $199 to $299 for the device. The strategy change may be an effort to attract month-to-month customers and clear space on store shelves for new products. Analysts at Piper Jaffray & Co. and Broadpoint AmTech Inc. expect new iPhone models to arrive in the next few months.
Apple may introduce a cheaper version of the iPhone this summer for $99, along with a higher-end version with twice the storage currently available, Broadpoint analyst Brian Marshall said this week in a note to clients.
IPhone customers are required to spend $30 a month on a data plan, giving them access to Web features. That’s on top of a voice plan, which starts at $39.99 a month. IPhone customers who sign up without a monthly contact will be required to pay the same amount, Siegel said.
The new iPhone prices might not make sense for buyers, said Hakim Kriout, a portfolio manager at Grigsby & Associates, a New York-based securities-trading firm. Customers would be better off paying the regular contract price and getting the discounted phone, he said. Then they could cancel their contracts if they wanted to go month to month. Termination fees start at $175.
The original iPhone customers will finish out their contracts on June 30, two years after the device’s debut. About 270,000 bought the phone in the first two days it was on sale, with 1.12 million getting it in the first quarter it was available. AT&T said in July that it planned to sell the device with no contract eventually.
AT&T fell 10 cents to $25.60 in New York Stock Exchange composite trading at 4 p.m. The stock has declined 10 percent this year. Apple rose 10 cents to $101.62 in Nasdaq Stock Market trading.
By Amy Thomson