Walmart Drops 16GB iPhone to $97

Walmart raised a few eyebrows Tuesday morning when it dropped the price of the 16GB iPhone 3GS from US$199 to $97. The surprise price reduction added fuel to the rumors and speculation that Apple will introduce the fourth generation iPhone during its annual World Wide Developers Conference on June 7.

The reduced price is available for both the black and white models, and requires the usual two-year service contract.

Apple is expected to unveil the fourth generation iPhone at WWDC during a keynote presentation hosted by CEO Steve Jobs. Based on a series of leaks, the updated model will likely include the first major redesign of the unit’s case, a 5 megapixel camera and flash, a faster processor, and potentially a front facing camera, too.

When Apple released the iPhone 3GS, the company kept the 8GB iPhone 3G in its lineup for $99. Assuming Apple continues to keep a low cost version of the combination iPod and smartphone in its product inventory, the 16GB iPhone 3GS may take the iPhone 3G’s place.

Apple hasn’t confirmed that it will introduce the fourth generation iPhone at WWDC, but the timing matches the company’s usual product update pattern.