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Now this could be interesting: Boy Genius Report is claiming that Apple and AT&T are working on a cheaper version of the iPhone 3GS to replace the current $99 3G model. They list the info as unconfirmed, but apparently two of their spies have hinted that this is happening–one even elaborated that the move could be a response to the hype surrounding the release of the Motorola Droid.

Now the BGR folks are known for gathering big scoops, but I’ll still need to see a little more info before I can concur. Then again, the move does make complete sense for Apple. If I were them, I wouldn’t completely ignore the Droid release either, and a $99 8GB model with the features of the 3GS could be compelling to many consumers.

Apple also needs to start looking beyond their current once-a-year upgrade system if they hope to compete with the more agile Google Android phone releases. Otherwise, they might find themselves with hardware and features that seem slightly long in the tooth halfway through their annual release cycle. We’re basically half a year away from the launch of the 3GS, and the Droid has already surpassed the 3GS hardware in many ways.

[Source: Boy Genius Report]