June 27, 2014, 2:09 PM — Wal-Mart today reduced prices of Apple's iPhone 5S and iPhone 5C to $99 and $29, respectively, when tied to a two-year carrier contract.
The cuts, which followed recent reductions to $149 and $49, put Wal-Mart's prices 50% less than Apple's for the iPhone 5S and 71% less than the iPhone 5C's list.
Both models are available only at Wal-Mart stores -- not via its e-store -- and the prices are for the entry-tier devices that sport 16GB of storage. A two-year commitment to a mobile carrier contract is required to get those prices, so the offer is good only for new activations or those current customers who are eligible for a subsidized upgrade.
Wal-Mart did not immediately reply to queries about whether pricier iPhone 5S and 5C handsets, those with 32GB and 64GB of storage, received corresponding price cuts.
Although most analysts expect Apple to reprise 2014's schedule and roll out one or more new iPhones this September -- dubbed "iPhone 6" in keeping with Apple's alternating naming convention that uses a numeral in even-numbered years, then adds an "S" in odd-numbered years -- Wal-Mart may be preempting that with an inventory drawdown. Or it may simply be trying to drive foot traffic to its stores.
The lack of online sales at the new prices suggests the second has precedence.
Also possible is the fact that iPhone sales have recently flagged in the quarter preceding new models. Last year, for example, second-quarter iPhone unit sales were down 17% quarter-over-quarter; in 2012, the sequential decline was 28%.
For the last two years, Apple has launched new iPhones near the end of the third quarter.
Apple has recognized the downturns, acknowledging that as news builds about the next iPhone -- as has been the case this year as well, with most assuming that the iPhone 6 will feature a larger screen -- some customers postpone purchases until the newest hardware reaches retail. "We're reading the same rumors and speculation that you are about a new iPhone, and we think this has caused some pause in customers purchasing," admitted Peter Oppenheimer, then Apple's CFO, during a mid-2012 conference call with Wall Street analysts discussing the second quarter.
Wal-Mart, perhaps with Apple's blessing or at least acquiescence, may have cut prices to boost sales in the weeks preceding the introduction of the iPhone 6.
If Apple hews to its 2013 schedule it will introduce new iPhones this year on Sept. 9 and start selling the handsets on Sept. 19. The first date is just over 10 weeks away.
Wal-Mart cut the price of the iPhone 5C to $29 with a two-year contract, a 71% savings compared to Apple's list price. (Image: Wal-Mart.)
Gregg Keizer covers Microsoft, security issues, Apple, Web browsers and general technology breaking news for Computerworld. Follow Gregg on Twitter at @gkeizer, on Google+ or subscribe to Gregg's RSS feed. His email address is firstname.lastname@example.org.
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