Wal-Mart slashes iPhone 5S and 5C prices by as much as 71% off list

In-store-only discounts to $99 and $29 suggest attempt to drive foot traffic

Wal-Mart today reduced prices of Apple's iPhone 5S and iPhone 5C to $99 and $29, respectively, with a two-year service 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 the retailer's website -- 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 customers or current customers who are eligible for a subsidized upgrade.

Wal-Mart also cut in-store prices of the 32GB iPhone 5S and 5C to $129 and $199, respectively, retaining the $100 differential that Apple maintains between its storage allotments. Those prices are 33% to 35% under Apple's suggested retail prices.

Most analysts expect Apple to reprise 2014's schedule and roll out one or more new iPhones this September -- with the new models 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 -- and Wal-Mart may be attempting to sell off inventory in advance of the arrival of new models. Or it may simply be trying to attract shoppers to its stores.

Asked whether the discounts were designed to lower inventory or drive store traffic, a Wal-Mart spokeswoman said only, "We're providing our customers with the affordable technology that they're looking for."

The fact that the new prices are not available online suggests that driving foot traffic to stores may be the primary goal.

Another possible factor is the fact that iPhone sales in recent years have flagged in the quarter preceding the introduction of new models. Last year, for example, second-quarter iPhone unit sales were down 17% quarter-over-quarter; in 2012, the sequential decline was 28%.

In the last two years, Apple has launched new iPhones near the end of the third quarter.

Apple has noticed the downturns. The company acknowledges that, as speculation about the next iPhone's features starts to build (something that has already started to happen this year, with many people assuming that the iPhone 6 will have 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 its 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.

Online descriptions of the $99 iPhone 5S and the $29 iPhone 5C can be found on Wal-Mart's website.

Wal-Mart promo
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, and on Google+, or subscribe to Gregg's RSS feed . His email address is gkeizer@computerworld.com.

See more by Gregg Keizer on Computerworld.com.


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