Just when we thought that iPhone would be facing stiff competition from Droid this festive season, rumors of Apple launching an 8GB iPhone 3GS at unbelievable $99 price tag for Christmas are already doing the rounds. According to Boy Genius Report:

Definitely not confirmed, but rather interesting nonetheless. We’ve heard now from two sources that AT&T, and we guess Apple, are contemplating launching an 8GB iPhone 3GS at the $99 price point before Christmas. One source said this was AT&T’s way of combating the DROID madness.

Image Source: CIO.com

Droid has been receiving great reviews since its launch and has already been rated above its peers. After a discount of $100, Droid is at the same level as iPhone 3G. The cheaper version of iPhone by Apple with AT&T would come for $100 lesser and a 3.2-megapixel camera. This could give a great boost to the sale of iPhone as people would obviously be drawn to the price.

At $200, Droid is loaded with some of the best features. Its GPS navigation by Google has got everyone talking while the camera resolution is one of the best in its class. What needs to be seen is whether a cut in $100 would make people forget about the niche features Droid is offering.