A reader who wishes to remain anonymous has informed us that, as of April 13th, Geniuses are now able to repair broken iPhone screens for $199. While the fee is the same as buying a new 8GB iPhone 3G, it will benefit owners of the 16GB iPhone 3G. Additionally, customers with faulty touch screens not resulting from physical damage will receive a screen replacement at no cost.
AppleStore is also reporting that Apple is now replacing water-damaged iPhones for $199. The policy applies to incidents not covered by the iPhone warranty. The thinking here is that the customer will not be required to purchase a new iPhone and renew their AT&T contract.
It is possible that the new policy is intended to be a move to clear additional iPhone 3G stock for an iPhone refresh later this year.