Crunch Gear reported a piece of news that I've been eager to know. What does an existing iPhone 3G customer has to pay to get an upgrade to the new iPhone 3Gs? Try $500 for 32GB and $400 for 16GB. Ouch! This is something I never fully understood. I get the fact that they would give a big incentive for a new customer acquisition; but what good does it do if you can't ever retain existing customers. In a market this competitive, I find more reasons to consider the Palm Pre after my contract is up; since I'll be a new customer there, they'll treat me with a much better lucrative offer.I also understand that in this business, hardware makers and carriers are losing money upfront to signup for a new customer, thats why I have a proposal: similar to early contract termination, the early equipment discount should also be pro-rated offering most discount to longer term customers. In this schema, they would drop the iPhone 3GS price as the customers reaches closer to the end of their 2-year contract; maybe something like $199 (for 16GB 3GS) on the 23rd month while adding $10 more for each preceding month (ie. $209 on the 22nd month, $219 on the 21st month of contractual term...); this will back the phone into $439 right after someone had upgraded their plan at month one.