iPhone 3G may be sold unsubsidized

Will the iPhone be sold unsubsidized? That's the conclusion I'm coming to as I read between the lines of this AT&T Memo to Retail Managers. The money quote is this: "However, not all customers will be qualified upgrades. AT&T has not determined the price of the 3G device for non-qualified upgrades." If I'm reading this right, AT&T will sell off-contract iPhones at a yet-unspecified price.

If true, this is terrific news for anyone who wants to hack their iPhone and not be bound to an AT&T contract. It's also fabulous news for anyone who wants to upgrade to a new iPhone but doesn't live in a 3G-serviced area.

If historical prices are any indicator, off-contract phones could sell for a few hundred dollars above the subsidized price. At the very least, according to this memo, you can sign up for a contract, get the iPhone and cancel after 30 days, paying the early termination fee. After that, the iPhone is yours free and clear. I am not a big fan of this option as I do not like signing contracts that I do not intend to keep. Regardless, this is (a) legal; and (b) in compliance with contract terms.

Thanks, Ethan Hixson.

TUAW reader Rawheadz writes: "The money quote is that you DON'T have to return the phone after the 30-day return period, so long as you pay the early termination fee; so, essentially, the "unsubsidized" price for the iPhone 3G is going to be $199 + the ETF." To which I add, plus one or two months of service.

Other readers clarify that "non-qualified upgrades" refer to existing non-iPhone customers who have not yet finished their equipment terms and would be expected to pay a penalty for equipment changes.

Although I wonder if it would be cheaper just to buy a foreign iPhone, I'm still hoping that Apple sells them in-box unactivated at their store. And there's got to be some sort of developer solution that doesn't involve contracts for each development unit.

Here's some math from TUAW reader Mike:

$199 for iPhone 3G $ 36 to activate $ 80 approximate, one month service plus taxes $170 Early Termination Fee

That adds up to about $485 + tax for a 8 GB ($585 + tax for 16 GB).