AT&T will subsidize 3G iPhone

AT&T confirmed it will subsidize Apple's 3G iPhone to customers who sign a two-year contract for the phone. AT&T CEO Ralph de la Vega told the WSJ that the company believes the $199 price point is necessary to drive mass market adoption. While he admits that the subsidy will negatively impact the company's earnings in the short term (2008 and 2009), he believes the long-term rewards will make up for the initial hit.  Specifically, he expects the operator to see a significant uptick in data usage and a reduction in churn.  Some analysts estimate that AT&T will be paying as much as $499 per iPhone. The company plans to make up for some of that cost by charging consumers a higher monthly fee for the unlimited data plan.  AT&T currently charges $20 per month but with the new iPhone it will charge $30 per month. Of course, the new 3G iPhone users will get the advantage of faster data because they will be using AT&T's HSPA 3G data service instead of the slower EDGE service.

- Don't forget to check out our photo slideshow...

Here's a rundown of other iPhone details:

iPhone launch: It will make its commercial debut July 11 in 22 countries.  The 8 GB 3G iPhone will be priced at $199, the 16 GB device will cost $299. The new device will come with GPS, iPhone 2.0 software and WiFi. It also sports a battery life of 5 hours of 3G talk time and 300 hours of standby time.

iPhone metrics: Apple CEO Steve Jobs told attendees at yesterday's Worldwide Developers Conference that Apple sold 6 million iPhones in the first year and that the company ran out of the current generation of devices several weeks ago. The device has 90 percent customer satisfaction. In addition, 98 percent of users are browsing online, 94 percent are using email and 90 percent are texting. Approximately 80 percent are using 10 or more of the phone's features.

Special features: The 3G iPhone enables simultaneous voice and data communications and features a wealth of enterprise applications, including support for Microsoft Exchange ActiveSync for over-the-air push email, contact and calendar syncing, not to mention remote wipe and Cisco IPsec VPN for encrypted access to corporate networks. 

MobileMe: Apple introduced MobileMe, a new Internet service delivering push email, push contacts and push calendars to native iPhone, iPod touch, Mac and PC applications. MobileMe also provides a suite of ad-free web applications promising a desktop-quality experience through any modern browser--applications include Gallery for viewing and sharing photos and iDisk for storing and exchanging documents online. MobileMe includes 20 GB of online storage that can be used for email, contacts, calendar, photos, movies and documents. The subscription-based service costs $99 per year for individuals and $149 annually for a Family Pack, which includes one master account with 20 GB of storage and four Family Member accounts with 5 GB of storage each.

For more on the iPhone 3G:
- click here to see our slideshow
- read this release
- read this WSJ story

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