iPhone 3GS now only $49 from AT&T!!!!! (As long as you ignore the other $1,319)

Before we start, I’d like to point out that those extra exclamation marks are ironic.

So.

TechCrunch, again, breathlessly reports the iPhone’s utter, utter dominance of the world’s mobile market. (Where world is defined as everything within the United States borders).

Here’s the Crunch’s analysis:

*BAM* Just like that, AT&T destroyed the $50 smartphone market by dropping the iPhone 3GS down to the same level as Nokia communicators, teeny-bop Blackberrys and the bargain-bin Android devices. That whole market now has to compete with the big dog, the iPhone 3GS.

We shall see.

I just can’t the discussion about phones that doesn’t include the full purchase price of the device.

The iPhone is not, in any way, $49. It requires a 2-year commitment of a *MINIMUM* of $1,319 (that includes the minimum service plan and $15/month for a whopping 200mb data plan — it does not include messaging).

It’s going to be fascinating to see how the market reacts to this change in pricing.

Will millions more flock to the iPhone?

I don’t know.

I think there’s undoubtedly pent-up demand from Verizon, Sprint and TMO customers keen to get hold of an iPhone ‘at some point’.

I really don’t think the iPhone story is going to get interesting until we see iPhones (the 3G, or the 3GS) on sale for $99 or $79 on Pay As You Go. That kind of strategy would really change things dramatically. The TCO of these top level smartphones is still ridiculous for your average normob (“normal mobile user”).

The danger with putting the iPhone on-par (pricing wise) with BlackBerry and Android devices is that we could well see that the market for iPhone is — more or less — flat. If the other devices continue selling well when they’re exactly the same price as the iPhone, Jobs is going to have some explaining to do.

For a long time, the iPhone has always been premium. Indeed it’s strategically high price point has helped other manufacturers who — in the rush for the cool phone — would have lost out to iPhone.

How will the American consumer react to a genuine choice? I’m tempted to suggest that your average price-sensitive 21 year old heading into the AT&T store to buy a contract would probably rather have an iPhone 4, not the 3GS. Will they be happy to get second-best (i.e. not the iPhone 4) for the same price as a reasonably up to date BlackBerry or Motorola?

Let’s wait a few months and see what happens.

What do you think?