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Samsung Instinct to Challenge the iPhone

Sprint Nextel Corp. will be taking on the iPhone with a lower price for its own touch-screen smart phone, the Samsung Instinct.

The carrier said Wednesday that the Instinct will cost $129.99 when released on Friday. That compares with $199 for the cheapest model of the new iPhone, which goes on sale July 11 with AT&T Inc. as the carrier.

The Instinct shares many features with the new iPhone, including access to a fast wireless data network and a GPS receiver. Sprint was unusually involved in the phone’s development, and plans to promote it heavily.

The new iPhone costs half as much as the old one, since AT&T is now subsidizing the hardware, much like carriers do for other phones. Previously, Apple had a unique arrangement with AT&T under which the phone was sold at full price, but Apple got a share of wireless service revenue from the carrier.

Before the announcement of the iPhone price cut, Sprint had indicated that the Instinct would cost more than $200. Afterward, it said it would match the price. Wednesday’s announcement lowers the price further, and points to the intense competition in the smart-phone market, which has been very strong the last six months.

The Instinct’s price is with a two-year contract and after a $100 mail-in rebate.

The purchase price of a smart phone is only a fraction of the total cost of ownership, since the phones require a data plan. The cheapest monthly plan for the Instinct will cost $69.99, which ends up closer to $80 with taxes and fees. The cost for two years of service is then about $1,900.

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