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Wal-Mart plans to sell the black 8GB iPhone 3G model, for $197. The 16GB, in black or white, will be priced at $297. All of the phones require a new two-year service agreement from AT&T Inc or a qualified upgrade, Wal-Mart said.

Wal-Mart typically appeals to a lower-income group of shoppers than those who buy Apple's Macintosh computers, iPods and iPhones, which are typically more expensive that other PCs and music players. But the world's largest retailer has also lured new customers seeking low prices in a recession.

Numerous websites had previously speculated that Apple would offer a 4GB model of the iPhone for $99 at Wal-Mart stores. But the phones being sold at Wal-Mart are the same ones already on the market, for about $2 below the prices offered at other locations.

AT&T, the exclusive U.S. wireless service provider for iPhone, currently sells the cheapest version for $199 for a model with 8GB of storage, and $299 for the 16GB version.

Best Buy has currently the 8GB iPhone on sale for $189.99 and the 16GB version for $289.99, each priced $10 less than their usual price at Best Buy.

The phones will be available in nearly 2,500 stores beginning in December 28.