New iPhones Already Discounted at Walmart

Consumer Electronics

Published: September 12, 2013 10:30 am

Last Updated: September 13, 2013 10:19 am

In what might be an unprecedented move by Apple Inc. (NASDAQ: AAPL), the company apparently has agreed to permit Wal-Mart Stores Inc. (NYSE: WMT) to sell the iPhone 5C and iPhone 5S at discount prices. The 5C, which carries a list price of $99, will sell for $79, and the 5S will sell for $189, compared with the list price of $199.

Apple surely will receive its full selling price from Walmart, so revenues will not be affected, but the optics are unusual to say the least. Discounting a new product just two days after it has been introduced is new ground for Apple, at least in our memory. Why would the company do this?

It is no secret that the new iPhones have been greeted with a lukewarm reception at best, and perhaps Apple is angling to bump up sales numbers by letting Walmart discount the phones immediately. If consumers believe there is a stampede for the new phones, well, maybe they will create one.

More likely, Apple is running a trial. The company knows that sales of low-priced smartphones are projected to explode in the next few years. Even though the iPhone 5C priced at $99 is a good buy, dollar-conscious consumers might need an extra shove to part with their scarce cash. If sales at Walmart can demonstrate that discount pricing both moves product and provides profits, the company will have set itself up for success in that part of the market in which price is the leading consideration among consumers and where most of the growth is expected. That could make a significant difference in Apple’s future sales in China and other emerging economies.

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The discount offer appears to be limited. According to CNET, preorders for the 5C can be placed with Walmart starting Friday and must be picked up and paid for by September 25. Orders will be filled on a first come, first served basis. The iPhone 5S is not available for preordering, so buyers will have to go to Walmart on September 20 to purchase the discounted phone.

Apple’s shares are trading up about 0.3% in the first half hour of trading Thursday morning, at $469.24 in a 52-week range of $385.10 to $705.07.

Walmart shares are up 0.5%, at $74.39 in a 52-week range of $67.37 to $79.96.

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