Rumour has it that Apple is planning on kicking the Motorola Droid out of the water with a pre-Christmas price cut on the iPhone 3GS which will see the iconic smartphone go as low as $99 in a bid to distract from the Droid according to a report on pcworld.

Apparently AT&T is weighing up the $99 option to battle the high interest in the Motorola Droid. The iPhone 3G 8GB is already at $99 so a move to drop the iPhone 3GS to the same price point could well mean either another drop for the iPhone 3G or the discontinuation of the 3G entirely.

The Verizon Motorola Droid has already overshadowed the launch of the BlackBerry Storm 2, so can an iPhone 3GS price cut tackle the Motorola Droid?