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Get ready, iPhone fans: Apple (Nasdaq: AAPL  ) is preparing to dispense that elusive fourth-generation iPhone.

We've known about improvements to the iPhone's software for some time, including long-overdue multitasking features. The hardware has been seen in passing, under furtive circumstances worthy of an industrial spy novel. And of course, one would expect Steve Jobs to introduce the new phone when he takes the stage at the Apple Worldwide Developers Conference in two weeks.

But the evidence is getting more concrete by the hour. Wal-Mart Stores (NYSE: WMT  ) reportedly just stopped taking orders for older-than-Methuselah iPhone 3G handsets and issued a press release that it had dropped the price on the 3GS model from $195 to $97 with a two-year contract with exclusive carrier AT&T (NYSE: T  ) . 3G phones are now hard to come by through Apple's own online store as well. This is often a sign of impending obsolescence, as Apple and its retail partners clear out old stock to make way for the new hardware. And this time, some features of iPhone OS 4.0 are reportedly not compatible with 3G iPhones, making the model instantly expendable.

Jobs doesn't seem to have any qualms about squeezing every last available penny from his customers. The reason he gets so upset when details on upcoming products leak to the press is because that public knowledge can be "immensely damaging" to Apple as "people that would have otherwise purchased a currently existing Apple product would wait for the next item to be released." That's according to court documents, not a rumor or a Tweet. Hey, as long as consumers are playing along, that's just good business sense. In any case, we'll soon see the amazing, magical product Jobs fought so hard to keep under wraps. (Magic wand or flying broom? You decide!)

The onrushing flood of competitors that includes Google (Nasdaq: GOOG  ) Android phones, the Palm (Nasdaq: PALM  ) Pre that Hewlett-Packard (NYSE: HPQ  ) snatched back from the edge of the grave, and whatever BlackBerry tricks Research In Motion (Nasdaq: RIMM  ) might have up its sleeve are up against some formidable competition here. 

The 3GS is a fine phone and arguably a steal at $97 per unit, and the next-generation iPhone will surely have some hitherto undiscovered wrinkles to make it a worthy successor. The summer looks like a fine time to pick up a smartphone, and the coming holiday season should truly separate the wheat from the chaff. With the mobile market coalescing around a small group of winners, the door for major market share moves is creaking to a close.

Would you buy a discounted iPhone 3GS or just wait for something better? Please discuss in the comments section below.

Fool contributor Anders Bylund owns shares in Google, but he holds no other position in any of the companies discussed here. Wal-Mart Stores is a Motley Fool Inside Value pick. Google is a Motley Fool Rule Breakers selection. Apple is a Motley Fool Stock Advisor recommendation. Try any of our Foolish newsletters today, free for 30 days. You can check out Anders' holdings and a concise bio if you like, and The Motley Fool is investors writing for investors.

Read/Post Comments (8) | Recommend This Article (27)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On May 25, 2010, at 5:42 PM, MAURY56 wrote:

    My adult children have been trying to get me an IPhone. My wife gavae me an iPad last week for my 76th birthday. I can play wiht that while I wait for the newest iphone. In technology, always buy leading edge. It will be obsolete soon enough without jumping into the race already one lap behind.

  • Report this Comment On May 25, 2010, at 5:56 PM, Chexi wrote:

    I subscribe to a different philosphy and generally buy only the 1 iteration old technology at a huge discount. If I lived without it before, I can live without it now. If it was awesome when it came out, it's still probably pretty darn good now. The only time I broke this rule was with the 3GS, but I will not be breaking it with the 4G. The 3GS is a fantastic machine. I just wish it would get reception in my office.

  • Report this Comment On May 25, 2010, at 7:25 PM, foolexaminer wrote:

    Obviously full blown DBMS like Oracle, Sybase, or SQL will NOT be practical or work efficiently on iPhones even on an iPhone 4G. However, Lite versions of SQL will work perfectly fine just as they do today for iPhones, Palm Pres, and Android smartphones.

    This will be iPhone's first time trying to implement some form of multitasking within their next OS after complaining about how impractical and inefficient multitasking would be on their iPhones. I would suspect a ton of issues surrounding multitasking on the iPhone 4G considering how new they are to such technology. Meanwhile, webOS Palm Pre and Android smartphones have an edge and a lead in this department as multitasking is a native feature built-in their OS for quite some time now.

    Without Flash support for the iPhone 4G, Apple will continue to lose more and more consumers to leading edge smartphones like the Android HTC Incredible which feature far more robust capabilities than the iPhone 4G. Android, Palm Pres, Blackberry smartphones are expected to all support and run Flash 10.1 by the end of this year while iPhone will repeat the same complaints. But will eventually adapt to consumer trends: Flash Support and Compatibility.

    The future of mobile computing is in the hands of what consumers want. If iPhone 4G cannot support WiFi hotspot tethering or Flash like Android and Palm Pre smartphones, iPhone popularity will continue to decline.

  • Report this Comment On May 25, 2010, at 7:41 PM, Henry3Dogg wrote:

    Um. I think iPhone popularity would have to start to decline, before it can continue to decline.

    If a beta version of Flash, and tethering (that has been on the iPhone for the last year) are the best that Android can manage then the Android consortium has big problems. It's no wonder HP jumped ship.

  • Report this Comment On May 26, 2010, at 6:04 AM, ldanby1952 wrote:

    I don't know anything about os,flash or any other of the technical comparisons, but I do know numbers.The i phone is clearly gaining momentum and the i pad can't be found.

  • Report this Comment On May 26, 2010, at 9:19 AM, sk8ertor wrote:

    Anyone who rushes out to buy this phone just because it's new is out of their mind. I am not going to buy any iPhone because I'm stick of getting screwed around. Why no SD card? They make you pay a fortune to get the additional memory. Also, I've had a bad experience with Apple products (iPod especially). I'm done with their Chinese crap. They need to start manufacturing quality products in the USA and get rid of the "designed in california" BS on the back of their product.

  • Report this Comment On May 30, 2010, at 11:15 AM, beetlebug62 wrote:

    <<This is often a sign of impending obsolescence, as Apple and its retail partners clear out old stock to make way for the new hardware. And this time, some features of iPhone OS 4.0 are reportedly not compatible with 3G iPhones, making the model instantly expendable.

    Jobs doesn't seem to have any qualms about squeezing every last available penny from his customers.>>

    One, the existing models are not obsolete. Even the first EDGE iPhone runs iPhone OS 3.0. How many other makers' phones from 3 years ago can run a current OS?

    Having said that, iPhone OS 4, since it has multitasking, requires a handset with more ram, and those earlier iPhones, the EDGE model and the 3G model don't have enough ram to multitask efficiently. Jailbroken iPhones have shown it's technically possible, but not very practical. Nevertheless, if you haven't missed 3rd-party app multitasking, since the core apps can multitask, as everyone knows, except analysts, then there's no need to upgrade. Jobs is not forcing anyone to upgrade, so Bylund's snarky insults about squeezing customers is his usual nonsense.

  • Report this Comment On June 02, 2010, at 10:47 AM, AlbertaBorn wrote:


    This is why Apple doesn't use flash - it's a busines decision, and a damn good one

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