Amidst the rumors of a $99 4GB iPhone that might be sold after the holidays at Wal-Mart, analyst firm Kaufman Brothers has reported that a $99 device is inevitable. The exact timing of the discount remains unclear, although Apple could be developing a strategy to expand the range of iPhone products to include a low-end, mid-range, and high-end device. The new products are likely to offer feature differences beyond the current availability of several flash storage capacities.

The overwhelming success of the iPod line could partially be contributed to the breadth of available devices. Although Apple does not hold the same market share in the mobile phone segment as it does with personal media players, providing additional handset options could further establish its presence, drawing from the established strength of the iPhone brand.

The Kaufman analysts believe that the iPhone could support the $99 price without significantly reducing margins. Apple and mobile carriers negotiate subsidies, revenue sharing plans, and royalties. Although the actual cost of the device is closer to $700 by some estimates, the iPhone is typically purchased with a more expensive data plan in addition to the voice plan. Customers in certain countries already pay less than $199 with longer contracts and premium packages.