Walmart Selling iPhone 5 Relatively Dirt Cheap, Is Android Causing More Pain?

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News Posted: Sun, Dec 23 2012 5:21 PM
If you're looking for a last minute Christmas gift, head on over to your local Wallyworld (if you can stand the crowd this time of year) and browse the Apple products, you might be surprised at what you find. Namely, Walmart is selling the iPhone 5 for just $127 in-store with a two-year service agreement to AT&T, Sprint, or Verizon. The iPhone 5 normally sells for $187 at Walmart, and $200 on Apple's website, so this is a fantastic deal for a high-end smartphone. But is also an indication that Android has Apple in a headlock?

It's hard to tell. Under normal circumstances, discounts this deep usually run when there's a new model on the horizon, but the iPhone 5 is Apple's new model. What's also interesting about the timing of the sale price is that it comes on the heels of a UBS analyst lowering his iPhone sales estimate for 2013, dropping his forecast by 5 million units, the L.A. Times reports.

Apple iPhone 5

Like just about every iPhone launch, the iPhone 5 went through a few launch hiccups, including complaints about the camera introducing a purple haze in brightly lit environments, and reports of damaged (scratched and chipped) phones shipping straight from the manufacturing plant in China. Apple's supplier, Foxconn, went so far as to claim the iPhone 5 suffers from a design flaw, seemingly indicating that some of the problems are impossible to avoid.

Samsung Celebrate Galaxy S III
Samsung celebrating 30 million Galaxy S III sales.

Nonetheless, the iPhone 5 has found an audience and is the best version of the iPhone yet. Maybe that's not enough. Some feel that Samsung's Galaxy S III is the superior smartphone, even though it's an older device. We're also starting to see quad-core Android phones trickle into the market, such as LG's well-spec'd Optimus G.

It doesn't help that there are conflicting reports about market share. At the end of November, comScore released a report that had Android dominating smartphone penetration in the U.S. with a 53.6 share of the market in the past three months, compared to Apple in a distant second with a 34.3 percent share. Just a few days ago, Kantar World Panel ComTech released conflicting figures that had iOS in the lead with a 53.3 percent share of the smartphone market in the U.S., compared to Android's 41.9 percent.

Will the real smartphone leader please stand up?
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Dave_HH replied on Sun, Dec 23 2012 6:26 PM

Those falling prices. They may be a pretty good indicator that a definitely *** in Apple's armor has been exposed.

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sevags replied on Sun, Dec 23 2012 6:36 PM

We don't know that for sure... This could jsut be Walmart's way of offering a "door buster" every say of the month on an item they know will bring people into the store. The purpose of door busters is to get people into the door hoping they buy other things other than just the 1 discounted item. No one else has discounted the iphone5 yet so you can't say this is a trend but could be a 1-off attempt by walmart to to drive holiday business.

Also there will never been a smartphone leader unless everyone does choose 1 model and stick to it for a very long time. It dfoesn't matter how big or small of a success the s3 is because it won't change when the s4 is released and this is true for all smartphones out it doesn't matter the specs or popularity because every manufacturer wants to upgrade ASAP. The days of a company like Motorola selling more than 130+ million phones like they did with the original Razr is over no one product will stay relevant in the smartphone market to garner such sales whuch take years.

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SmogHog replied on Sun, Dec 23 2012 7:14 PM

The Sprint 2 for the price of 1 deal on the Galaxy S3 makes each phone $99.

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I dont know if many of you know how the cell phone pricing works and how resellers like Walmart make profit. I will give you guys a rough idea. So let us say that for every voice and data phone they sell on contract, they make 1000 dollars. If the I5 sells at 200, then they make 800 off the contract, 200 off the device. Same goes for GS3s, Note2, Optimus G, and so on and so forth. Every I5 costs the carrier a cool 500 lets say. They sell it to resellers at an already inflated cost of 600 (usually right around there). It is a tax for being allowed to sell the phone... So if someone signs up, they make a cool 400 profit, which is a really high margin. Now on Androids, the price for the carrier is usually much lower than Apples, usually around the 50% mark. Meaning by the time they hit the stores, the carrier has already made quite a bit of cash, so dropping the price is not as big a deal. When Walmart goes and takes a cut of 20% in profits, that is a big loss on something like an iphone. On Androids, the price drops mean a lot smaller loss for the carrier and thus they usually credit resellers money for the sale. For example, in Canada the GS3 launched at 160. It is currently 0. We are not losing that 160, we get it credited back to us. Now the chain I work for has this thing going where you can get 25-100 dollars in store credits on top of that. We take that profit hit and we do it gladly as it increases our overall numbers, thus making the hit per phone a lot less significant as overall numbers go up. I hope this makes sense to someone so I havent just wasted all these keystrokes.

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rapid1 replied on Sun, Dec 23 2012 9:26 PM

While I never see Apple falling as far as they did in the computer game by being Prioritized device mongers back in the day, I have said for quite some time they will fall. I think they have run far as of now and well over where I expected. The one sticker they have is iTunes and apps which is also the only thing I give them credit for as with hardware all they do with it is make it pretty and upcharge the crap out of it like designer clothing. The difference is they dumb it down right and do not reveal most advanced features. I do see an end point though and I do not think it is far off on there phones where the general public starts figuring out at a greater number that there nothing special generally. While I know they will never be a minimal player again from what I see the market in general will correct and they will again be seen as nothing more than another smart phone rather than something special by anyone but the sheep. I really do not care here in all reality. MayhemMatthew makes a good pint that it means much more when it is a down priced iPhone than when it is a down priced Android because that has become the norm. The biter in the end of this is into Apples profit margin's. When investors start seeing that the prices will start to fall. I do not know how rapidly as I am in no way a stock predictor here, but never the less then some of the sheen will wear off quick and people to some degree will feel played. When that happens it can get ugly as Apple has seen in the past and positive for your competition very quickly.

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Brasskong replied on Mon, Dec 24 2012 2:32 AM

Fry's Electronics is offering the IPhone 5 for a buck cheaper at $126.00. I believe the trend has begun.

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Brasskong replied on Mon, Dec 24 2012 2:33 AM

Oh, and best buy has it for $149.99.

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Brasskong replied on Mon, Dec 24 2012 2:35 AM

amazon is offering the GS 3 for $.01 with new two year activation. Cannot beat that deal.

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