With Apple expected to unveil its next-generation iPhone 4G at its forthcoming annual Worldwide Developer Conference next month, Wal-Mart has announced a price reduction in the 16GB model of the currently-selling iPhone
3GS to $97 with a two-year AT&T contract.

Wal-Mart’s association with Apple dates back to 2005 when the retailer started a pilot program for selling Apple’s HP-branded 20GB iPod model, which turned out to be a short-lived one.

The announced $100 price-reduction of the 16GB iPhone 3GS by Wal-Mart, the country’s largest retail chain, is substantial – the handset presently sells at $197 from Wal-Mart and $199 cost through Apple.

With the price reduction taking effect from Tuesday, the cost of the lower capacity iPhone 3GS will almost be at par with the 2008-released 8GB iPhone 3G model, which, as per rumors, may soon be discontinued by Apple.

Noting that slashing of the iPhone 3GS cost comes in advance of Memorial Day weekend and might be a permanent one, Wal-Mart’s senior category director Mehrdad Akbar said: “It is our commitment to always lead on price.”

In fact, one analyst opined on Monday that Apple may officially slash the cost of the iPhone 3GS to $99 once the new iPhone model hits the store next month. Going by last year’s precedent, Apple had reduced the cost of the 8GB iPhone 3G to $99, when the iPhone 3GS was released.