iPhones on Walmart Shelves by New Year's?
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New iPhones on Walmart shelves by month's end? That's the word from a technology blog that claims the gadget is slated to show up on Dec. 28th.
Others are skeptical.
Neither Apple (NASDAQ: AAPL) nor Walmart (NYSE: WMT) returned calls for comment about the report, which claims Walmart will sell the current iPhone 3G 8GB version for $197 and the 16GB version for $297 provided the buyer purchases a two-year AT&T wireless plan.
However, more than a few comments about the blog were skeptical the letter was legitimate. Several media reports last week had claimed the retailer would be selling a 4GB iPhone before year's end.
Either way, the clock will soon tick down, helping to prove whether the reports are right. In the meantime, iPhone news rolls on.
Apple yesterday announced the iPhone would be made available unlocked on New Year's Eve and is promising a live demo of the unlock process sometime before Christmas.
The Walmart and unlocking news comes as Apple's popular smartphone continues to gain fans in a marketplace that has more than a few handset competitors cringing over declining sales and revenue.
While recent reports indicate Apple's iPhone sales growth has declined a bit, Apple continues to be a market force despite a depressed economic climate that has companies laying off employees and consumers thinking twice about electronic device purchases.
The iPhone is currently available through Apple's stores and online site, retailer Best Buy and its exclusive wireless carrier AT&T. Industry pundits have said a Walmart channel would be a huge revenue booster for both Apple, in terms of more units sold, and for AT&T given the data plan commitment.
For the third quarter of this year Apple said it sold 6.9 million iPhones, more than the 6.1 million total it sold of the first generation iPhone, which was on the market for over a year.
In a recent research note Piper Jaffray senior analyst Gene Munster predicted the iPhone, which accounted for 5.7 percent of total company sales this year, will expand to 18.4 percent of that total in 2009. Apple's iPhone will represent nearly 20 percent of the PC maker's overall product sales next year, according to the firm.
For AT&T, the reported Walmart sales deal offers a new subscriber channel that could pay off as well.
In a recent earning call AT&T (NYSE: T) lauded the iPhone as a primary reason for its robust wireless financials. Experts said AT&T's iPhone data services revenues are already so strong that even after device subsidies it can afford to pay part of the iPhone activation fee to Walmart.
AT&T sells the iPhone 8GB for $199 and the 16GB for $299.
According to AT&T's iPhone rate information a minimum subscription package starts about $75 as AT&T requires users to sign up for a two-year data plan at $30 a month. That's in addition to the calling plan and a messaging option. Currently the cheapest AT&T wireless plan is $40. Text messaging ranges from 200 messages for $5 a month to unlimited messaging for $20.
In its plan description AT&T makes it clear that only iPhones with data plans are allowed on its network.
"If AT&T determines that you are using an iPhone on your account without an eligible data plan, AT&T reserves the right to add an eligible data plan to your account and bill you the appropriate monthly fee," states the plan.
Such requirements by carriers could change, however, in light of increasing numbers of unlocked devices that let users choose their own carrier. Restrictive rules may give way in the drive to increase subscriber share and keep current customers happy.
Apple joins a growing list of handset makers now offering unlocked devices. Nokia pushed out 10 unlocked high-end smartphones in the past year, the latest three arriving in August. Palm's (Nasdaq:PALM) latest smartphone, the Treo Pro, debuted unlocked as well in August.
Palm told analysts that it decided to offer the Treo as unlocked due to customer demand. Both players believe users are willing to pay a higher device cost for the flexibility in choosing a wireless carrier. The higher cost comes as carrier subsidies go away with unlocked devices.
A Bernstein Research analyst report in January of this year stated that more than a quarter of people who bought Apple's iPhone are using them on wireless networks other than AT&T's. The report described it as a "stunning" number that could pressure Apple's business model.
That's because Apple receives a cut of AT&T's iPhone service fees. The report noted that if Apple hit its sales goal of 10 million iPhones by the end of this year, but 30 percent of devices sold don't result in any carrier payments, its revenue and profit would be $500 million and 37 cents per share lower than expected.