How Apple gains from dropping the price on old iPhones

Apple's move to drop the price of legacy iPhone 3G handsets to $99 effectively recaptured the market's attention from the weekend release of the Palm Pre, according to industry analysts who dissect the discounting strategy and note that Apple has succeeded with similar moves in the past. In the U.K., O2 disclosed its iPhone pricing, saying it will offer subscribers a choice of 18- or 24-month contracts.

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