Wal-Mart to Cut iPhone Price from $199 to $97

Price wars have hit the smartphone market. Today Wal-Mart is expected to cut prices on the 16GB 3GS model of the iPhone–reducing the smartphone from $199 to $97 beginning Tuesday.

CNN Money speculated about the dramatic change: “Apple (AAPL, Fortune 500) is widely expected to unveil a brand-new iPhone next month, and could be working with retailers to clear out its remaining inventory of the about-to-be-outdated model … The deal requires that the phone be purchased with a two-year contract from AT&T, the iPhone’s exclusive service provider.

As we reported on Friday, AT&T announced that they have dramatically raised early termination fees for a number of “higher-end devices” that people use to read books on a daily basis. The changes will affect any customers who sign agreements after June 1, 2010.