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So you might have heard that the iPhone 3G was going to retail for $199 from AT&T. I’ve already covered how it isn’t technically $199 for current iPhone users. And you heard Rene tell you that $199 is less than the notorious price DROP of the iPhone. Well TiPb has been wondering how Apple settled on dropping the price so dramatically.

And we settled on a story, kind of—more like a collection of reasons. We’ve analyzed the outcome back and forth, from reverse and from the beginning. And we think we have come to a conclusion (or at the very least, a conspiracy theory). In a purely speculative story, I’ll give you my opinion on how we reached $199.

Read on for Apple’s Path to $199

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[Updated following Phone Different Podcast #19, see below!]

Way back in February, Apple’s Chief Operating Officer, Tim Cook said:

“We’re not married to any business model.”

At the time — and it’s scary how long ago it seems already — the iPhone was only available in the US, UK, Germany, and France, with rumors of Ireland and Austria waiting in the wings. What’s more, these were all exclusive deals, with Apple doing their best to lock the iPhone down to single carriers in each territory in exchange for lucrative — and unprecedented — revenue-sharing deals that some have estimated could be netting Apple up to $15 per month, per subscriber.

So, with a potential billion dollars on the table, while they weren’t married to it, they no doubt felt more than a little lusty.

But in true Apple fashion, invoking perhaps the pirate mantra of old, and embracing the same mindset that has them run iTunes as a near-loss leader, price-cut the iPhone a scant few months in, and offer cheap family upgrade options on their OS and iApps, it looks like Tim Cook was serious.

Read on to find out just how serious he was…

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