Walmart to Discount iPhone 5 By $60 Beginning Saturday

[Michael Scrip]

1. Let's look at the facts. Apple would have promoted left and right that the iPhone 5 outsold the iPhone 4s; wouldn't you. Instead they have to combine all the sales to make it look decent. The article below was from Dec 2012. The 4S was outselling the iPhone 5 6 months ago while in it's prime. Show me one article that claims that the iPhone 5 outsold the previous gen.

http://bgr.com/2012/12/14/iphone-5-sales-iphone-4s/

What facts?

Apple has never broken down the sales of each individual model.

Plus... that article from December cites an analyst who said Apple would only produce 25 million iPhones in the 1st quarter.

But looking back at the last two quarters... Apple sold 47 million and 37 million iPhone respectively. WTF was that analyst smoking?

Yes that's all iPhones lumped together collectively... because that's what Apple reports.

There is no way of knowing which iPhone models are selling the most... and that article doesn't give ANY facts on the matter either.

Try not to listen to analysts...

2. So your telling me that Apple stores are now glorified repair and exchange centers? Basically your saying Apple products are not reliable and/or people are too dumb to operate Apple gear.

It is the same blindness that has Apple stocks down and why Tim Cook got his deal re-evaluated. Too many people still kissing Apple's feet. Next year January is going to be worst for the iPhone.

Apple Stores are showrooms first... and service centers second.

Yes... service is important no matter the manufacturer. Apple offers great service... but that doesn't mean all they do is repair and exchange.

 

[Mebsat]

I doubt that. iOS7 is unlikely to be ready for final release by then and new hardware does not make sense before the OS update. I would not expect 5S before Labor Day.

I kind of doubt it too, but I still can't believe Apple is going to let a variety of outlets sell the iPhone 5 for $129 for 3+ months.

I guess it comes down to if you believe in the fingerprint sensor.

If you do, it seems like they won't release the 5S until iOS 7 comes out.
(Apple said "This Fall").

If no fingerprint sensor, then the 5S could come out with an iOS 6 update, if there is a sensor, it seems like iOS 7 will be required.
I don't believe they will ship hardware with non-working features.

 

[maxosx]

Did you seriously think people used the literal meaning of the word magical to describe their products or something? And you must be living in another world if you don't think several of these products have revolutionized markets significantly (more than many of their competitors for sure).

Or what, do you really think Samsung's new toy is really "the next big thing"?

Oops, must've stepped on someones toes.

My post didn't say anything about Samsung. Bringing them up to make a point is an very old, tired, useless, tactic.

 

[imwoblin]

It gets even better. AT&T is now running a 50% off promotion which includes iPhones. You can now get a new iPhone 5 for $99 w/ new contract!

 

[Michael Scrip]

I kind of doubt it too, but I still can't believe Apple is going to let a variety of outlets sell the iPhone 5 for $129 for 3+ months.

Does Apple have a minimum advertised price? Or should they even care? Apple is still getting $649 for each iPhone 5 that these stores order from them. The price cut won't affect Apple's bottom line.

It's the stores who are taking the cut.

But AT&T makes their money on the 2-year contract anyway... so that $100 they're losing up front is a drop in the bucket.

And Wal-Mart only makes pennies from these iPhone sales anyway... they just want to get you in the store so you can buy other stuff.

Knowing that Apple and these retailers have a relationship... these price cuts would be authorized by Apple, right?

 

[bag of kittens]

Does Apple have a minimum advertised price? Or should they even care? Apple is still getting $649 for each iPhone 5 that these stores order from them. The price cut won't affect Apple's bottom line.

It's the stores who are taking the cut.

But AT&T makes their money on the 2-year contract anyway... so that $100 they're losing up front is a drop in the bucket.

And Wal-Mart only makes pennies from these iPhone sales anyway... they just want to get you in the store so you can buy other stuff.

Knowing that Apple and these retailers have a relationship... these price cuts would be authorized by Apple, right?

I'm not sure if Apple would be shipping the units to Walmart at a pre-arranged discount, or if Walmart bought the units at full price from Apple.

To be honest, I bet nobody on the MacRumors board knows this. If they claim to know, they are probably lying.

I also think as smartphones in general become commoditized in the future, Apple will look at this from a long-term view and sacrifice a little bit on profits in order to get new customers hooked on the Apple eco-system.

I think it's safe to assume that parabolic growth in smartphones is sort of done (evidenced by lagging S4 orders), and there will be other avenues for new growth.

 

[Michael Scrip]

I'm not sure if Apple would be shipping the units to Walmart at a pre-arranged discount, or if Walmart bought the units at full price from Apple.

To be honest, I bet nobody on the MacRumors board knows this. If they claim to know, they are probably lying.

I also think as smartphones in general become commoditized in the future, Apple will look at this from a long-term view and sacrifice a little bit on profits in order to get new customers hooked on the Apple eco-system.

I think it's safe to assume that parabolic growth in smartphones is sort of done (evidenced by lagging S4 orders), and there will be other avenues for new growth.

Good points.

I was under the impression that Apple sells the iPhone to retailers at full price... and then the retailers do whatever they need to do to sell it to a consumer. If there were any volume discounts... someone would have leaked that by now.

Apple *could* be taking a cut for the iPhone 5 this summer... but I really doubt it. I refuse to believe that Apple has a ton of iPhones and they're scared nobody wants them.

I don't think Apple is being forced into a "fire sale" situation

 

[bag of kittens]

I don't think Apple is being forced into a "fire sale" situation

I don't think so either

 

[alent1234]

Does Apple have a minimum advertised price? Or should they even care? Apple is still getting $649 for each iPhone 5 that these stores order from them. The price cut won't affect Apple's bottom line.

It's the stores who are taking the cut.

But AT&T makes their money on the 2-year contract anyway... so that $100 they're losing up front is a drop in the bucket.

And Wal-Mart only makes pennies from these iPhone sales anyway... they just want to get you in the store so you can buy other stuff.

Knowing that Apple and these retailers have a relationship... these price cuts would be authorized by Apple, right?

It will when the retailers will commit to buying less iPhones in the future

Why buy them if you have to lose money on the discounting?

 

[sectime]

Iphone as a BMW. Give me a ****ing break.

Both are imported, overpriced, scary to own without a warranty. Quite similar

 

[Terrin]

I need T-Mobile to do this so that it'll make it easier for me to drop this crappy Sprint network!

I am confused. T-Mobile charges $149 upfront for an iPhone 5 ($20 more then on T-MObile currently). If you have an iPhone 4 or 4S, it will give you one for 0 down. You then pay around $20 dollars on top of your monthly payment for 24 months.

With T-Mobile you can get unlimited everything for as low as $50 a month, plus the $20 phone payment. This is a no contract plan. With Walmart you have to sign up for a two year plan on Sprint, AT&T or Verizon. Without discounts, unlimited plans on Sprint, Verizon, and AT&T are around $130 a month (AT&T and Verizon don't even give you unlimited data, and Sprint's data network is slow).

T-Mobile's plans are still a better deal providing you live in an area where the coverage is good. T-Mobile and AT&T recently ranked as having the fastest data speeds.

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looks like the iphone 5 is not selling well, poor apple. GS4 and the htc one have really affected the sales

Or perhaps Apple wants to move as much inventory as possible, like every other year before, to get ready for a new product. Retailers have always offered deals on the most current model phone as the time for a new one approaches. Compared to the iPhone and HTC One, the GS4 stinks. Especially considering, they offer a lower quality version to the US market and it is going to start offering multiple versions of phones all cheaper quality under the GS4 brand.

It is not as if Apple is giving up margins by lowering he price, as by this point in time the cost of production for a nearly year old phone is less then it was a launch.

 

[Michael Scrip]

It will when the retailers will commit to buying less iPhones in the future

Why buy them if you have to lose money on the discounting?

Yeah... this raises more questions than it answers.

What's funny is... 3 out of 4 smartphones sold at AT&T are already iPhones. Clearly AT&T has no trouble moving iPhones.

I find this whole situation odd.

 

[Terrin]

Good points.

I was under the impression that Apple sells the iPhone to retailers at full price... and then the retailers do whatever they need to do to sell it to a consumer. If there were any volume discounts... someone would have leaked that by now.

Apple *could* be taking a cut for the iPhone 5 this summer... but I really doubt it. I refuse to believe that Apple has a ton of iPhones and they're scared nobody wants them.

I don't think Apple is being forced into a "fire sale" situation

Apple sells the phone to retailers at full wholesale price, not retail price. If Apple charges $649 for a 16 GB iPhone 5, retailers are paying less. Otherwise, stores like Best Buy or Amazon would not make a profit by selling them. Moreover, Apple occasionally lowers its wholesale price to clear inventory. It also controls when retailers can lower the price.

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It will when the retailers will commit to buying less iPhones in the future

Why buy them if you have to lose money on the discounting?

Retailers do not lose money on discounting. They pay less then retail price. Further, often times carriers offer spiffs (e.g. a bounty ) for selling a phone.

----------

I think it's safe to assume that parabolic growth in smartphones is sort of done (evidenced by lagging S4 orders), and there will be other avenues for new growth.

If you read the reviews, the S4 is not that great a phone. Moreover, it ships different versions under the same name. The US gets the weakest version.

 

[elvahsiao]

Really? That's really a big news.I would like to buy an Iphone 5 for my father! This might be a good chance. While I am a little afraid that Apple will send out their cheaper Iphone series this September. so I WONDER whether I should buy at this time.

 

[Michael Scrip]

Apple sells the phone to retailers at full wholesale price, not retail price. If Apple charges $649 for a 16 GB iPhone 5, retailers are paying less. Otherwise, stores like Best Buy or Amazon would not make a profit by selling them. Moreover, Apple occasionally lowers its wholesale price to clear inventory. It also controls when retailers can lower the price.

Ah, yeah. Retail vs wholesale... my bad. Any idea what Best Buy pays for the iPhone?

Then again... Best Buy isn't really selling the phone... they are resellers for the carriers, right? So how does that work?

If Best Buy sells a Sony DVD player... it's just between Sony and Best Buy.

What happens when Best Buy sells an Apple iPhone for Verizon? Now there's 3 hands in the cookie jar.

 

[Terrin]

How much stock does Wal-Mart keep if the current inventory level would have an effect on the inventory months from now?

Today is June 21st. Let's say we won't see the iPhone 5S until August 21st.

Are you telling me that Wal-Mart has 2 months of inventory in their possession?

I can't imagine any retail store holding that much inventory... especially $650 iPhones. I would guess Wal-Mart orders iPhones fairly frequently instead of placing giant orders.

Thoughts? Does anyone here work at Wal-Mart or have information about their cell phone inventory?

It has nothing to do with Walmart's inventory. It has to do with Apple's inventory. It is common for Apple to push to move product by lowering prices before a new product launch. Some people need an incentive to buy a older model knowing newer ones are coming.

 

[Terrin]

IAnd can someone explain why Apple builds all these Apple stores to only get undercut by Walmart and BestBuy? It's not like Apple sales their laptops and desktops in huge quantity. Even microcenter has the ipad mini for $299.

Sure it is common practice that a manufacturer cannot undercut retail partners in price. If Apple undercut others on price, the other retailers might not want to sell Apple's products.

 

[Terrin]

Ah, yeah. Retail vs wholesale... my bad. Any idea what Best Buy pays for the iPhone?

Then again... Best Buy isn't really selling the phone... they are resellers for the carriers, right? So how does that work?

If Best Buy sells a Sony DVD player... it's just between Sony and Best Buy.

What happens when Best Buy sells an Apple iPhone for Verizon? Now there's 3 hands in the cookie jar.

Phone sales are complicated. I worked at Best Buy demoing Apple products years ago (before the iPhone). The mark up on electronics is small. For an entry level iMac Best Buy made $50 to a $100 dollars. Best Buy really makes the money from up selling things like its own extended warranty service and higher margin peripherals.

I suspect the difference between wholesale and resale is small for the iPhone. Probably the same range as entry level Macs. However, Best Buy is probably being paid something from the carriers like $50 to sell a phone on top of the profit from Apple. Further, some phone manufacturers like Samsung will pay a spiff to a salesperson to push its phones.

 

[rickey603]

hey all. long time reader, first time poster here. thought i'd put some things to rest:

i work for a walmart in NY in the electronics department. i sometimes deal with the contract phones and have access to the telxon machine that tells me inventory and % mark-up. iphones (which walmart sells outright for $499, $599, and $699 for the 4, 4s, and 5 respectively) are marked up somewhere in the 5-7% range on the outright price. galaxys are marked up 20-30% on the outright price ($649 for the s3 and i believe $699 on the s4, we pretty much just got those in so i'm not as familiar). hardly anyone buys these phones outright though.

when it comes to activations through wireless carriers, the stores see payment on the back end from the carriers. for instance, my store does verizon and t-mobile activations. we get $600 on the back end from verizon per iphone activation and $200-$300 for any android/basic phone activation. all electronics stores that do phone activations are under this payment deal as well.

i can also tell you that walmart is not swimming in iphone inventory either. we get a handful in at a time and really never have more than 10-15 of any model in stock. our regional distribution warehouse also does not keep much stock of these either.

 

[Greg.]

Lol at Americans being excited at this. For us pretty much every phone is free with a contract, so this appears a terrible deal

 

[millerboy814]

what if i purchased an iphone before this promo (less than a week before) and i paid 190$ and then they run this promo, can i go back and will they give me the price difference?

 

[Michael Scrip]

It has nothing to do with Walmart's inventory. It has to do with Apple's inventory. It is common for Apple to push to move product by lowering prices before a new product launch. Some people need an incentive to buy a older model knowing newer ones are coming.

I don't understand how it has to do with Apple's inventory.

Apple tells their factories how many iPhones to make. They make hundreds of thousands of iPhones every day. And they sell that many every day too.

Basically every iPhone that gets produced will find an owner almost immediately.

I don't think Apple is saying "crap... we've got too many iPhones... slash the price to get rid of them quick!"

Apple has no problem selling iPhones... so they shouldn't have a bunch of unsold iPhones piling up in a warehouse somewhere. That's why I'm having a hard time believing it's a problem with Apple's inventory.

If this summer promotion is just a way to sell additional iPhones by offering a discount... fine... that makes sense.

But I don't believe Apple is offering these discounts because they are overrun with unsold inventory.

 

[NoMoreSony]

Rule #1: If you see yet another article about another big retailer price cut for iPhone - it just means that the end of the current sales quarter is very close.

Just refresh your memory -

https://forums.macrumors.com/threads/1504961/
Best Buy Offering $50 Off of All iPhone 5 Models [Update: Now With $100 Gift Card for Rewards Zone Members]

http://www.macnewsworld.com/story/76873.html
Walmart Cuts Apple Device Prices to the Core

Apple constantly subsidizes retail chains at the end of the quarter if sales numbers are weak.

 

[TypeMRT]

what if i purchased an iphone before this promo (less than a week before) and i paid 190$ and then they run this promo, can i go back and will they give me the price difference?

I did the same thing. Now I'm headed back to the AT&T store to find out if they'll do an easy price match for a refund or a difficult return/rebuy.

 

[Gigaman]

Oops, must've stepped on someones toes.

My post didn't say anything about Samsung. Bringing them up to make a point is an very old, tired, useless, tactic.

Where did I claim you posted about Samsung?? What, did I step on your toes by mentioning them? Done here.