Wal-Mart iPhone Sales: Where's the Discount?

Wal-Mart is rolling out sales of the iPhone 3G this weekend -- but don't expect to see a lot of savings. As was speculated back in November, the discount retailer will begin carrying the iPhone on its shelves Sunday. Missing from the equation, though, is the discount.

Wal-Mart's iPhone Offering

Wal-Mart will offer the 8GB iPhone 3G for $197 and the 16GB model for $297. That's a whopping $2 off AT&T's iPhone prices and includes the same two-year service contract. Best Buy, in contrast, is currently offering the iPhone 3G models for $189.99 and $289.99 -- seven bucks less than Wal-Mart's "always low prices."

Now, to be fair, Wal-Mart does promise to match any local store's advertised store price, so if you remember to bring in a printed Best Buy ad, you can get the lower price. Still, for a chain famous for having cheap stuff, it's surprising Wal-Mart isn't dropping its own price from the start -- particularly when you consider the recent $99 iPhone rumors and Wal-Mart's own past 3G deals.

Crunching Numbers

Wal-Mart got plenty of attention when it picked up T-Mobile's G1 Android phone at the end of October. The main reason? Its pricetag. Wal-Mart offered the G1 for $148.88, about $31 less than T-Mobile's direct deal. Put into perspective, we're talking a discount of about 17 percent there versus a discount of about 1 percent with the iPhone.

It's no surprise, then, that the rush of reports claiming Wal-Mart would sell the iPhone for $99 created a bit of a stir and didn't seem entirely unbelievable. Turns out, of course, that instinct was wrong.

Selling Strategies

So what happened? It may just be that Apple doesn't believe its iPhone needs that strong of a push. The iPhone already commands almost a third of the U.S. smartphone market and is steadily growing, while Nokia -- the only company ahead of Apple in sales -- has been consistently losing share over the past months. In fact, analysts say Apple is "the only reason" the smartphone market stayed strong throughout the year's economic downfall.
A $99 iPhone would have boosted sales, no doubt, maybe even expanding the phone's demographical reach. But a $197 iPhone placed in front of millions of new faces will probably do the job decently, too. And, given the iPhone's ongoing success and ever-increasing appeal among young users, I suspect Apple isn't too worried about the outcome.

» posted by ITworld staff

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