Is Wal-Mart flirting with Apple? That's what one analyst believes is behind the retailer's newly beefed-up electronics section that's being rolled out over the next few weeks.
The world's largest retailer by revenue is doing a splashy makeover of its tech section, but there are many reasons behind the move: By building up its high-definition TV and Blu-ray home theater offerings, Wal-Mart is looking to pick up where the now-defunct Circuit City stores left off. There are also a couple of new smart phones debuting soon, including the much-anticipated Palm Pre, which Palm said Tuesday would be available at Wal-Mart in addition to Best Buy, Radio Shack, and Sprint stores.
Could Wal-Mart soon be selling MacBooks?
(Credit: James Martin/CNET)But Ben Reitzes, an analyst with Barclays Capital, sees Wal-Mart's makeover as part of an elaborate flirtation with Apple that would result in the retailer being allowed to sell Mac hardware, which AppleInsider noted Tuesday.
"We believe Wal-Mart is actively pitching Apple to carry more products," he wrote. "With Wal-Mart improving its retail displays, we believe that the mega-retailer could eventually earn the right to sell select Mac products without diluting Apple's brand."
There are several reasons why this could be possible. First, the two are already friendly--iPods and iPhones can be found on Wal-Mart shelves. And Apple does allow Macs to be sold by third-party retailers, which right now includes Best Buy. Apple has employed the "store-within-a-store" concept at Best Buy, where Apple-trained salespeople help customers looking at Apple products on cookie-cutter Apple product displays (minimalist light-grain wood tables, surrounded by Apple signage). There's no reason this can't be replicated within the walls of Wal-Mart, which could be a good option should Apple and Best Buy some day choose to part ways again.
Plus, while there are 10,000 places to buy a Mac at retail right now, only about 225 of those are official Apple Stores. And, as Reitzes points out, Wal-Marts are located in places without an Apple Store for miles--sometimes not even in the same state. Putting Macs in Wal-Mart would definitely get Macs in front of more prospective buyers.
But then again, does Apple really need to do that? Apple's market share in North America stands at about 7.5 percent, and there's arguably not a lot of opportunity to increase that in any significant way. And while Mac sales are dropping, traditional computer hardware is not the focus of Apple's business going forward. The iPhone is going to be the focus, and the reason that is available in Wal-Mart is because there IS still a huge opportunity to grab share in the smartphone market.
There are also plenty of other arguments against it, mostly having to do with Apple's carefully crafted image of the Mac as an aspirational brand and Wal-Mart's success as the purveyor of discount commodities. Apple cedes some control over marketing when it puts products in the hands of the world's largest retailer, and then there's the issue of price: Apple might have to be more flexible on the price of the Mac, something it's been almost entirely unwilling to do (though there have been recent rumors that price cuts are in the offing). But even with the economy the way it is, and Mac sales slumping, both are going to come back eventually.
So while adding the store-within-a-store setup inside Wal-Mart is a good move for the iPod/iPhone sales, overall it seems unlikely that these displays will include Macs in the near term.
This post was updated at 9:41 a.m. PST with more details from Wal-Mart.
(Credit:
James Martin/CNET Networks)
Wal-Mart on Friday confirmed that it will be selling Apple's iPhone 3G, beginning Sunday at about 2,500 stores. The price, with a new two-year service agreement with AT&T (or qualified upgrade), is $197 for the black 8GB model and $297 for the black or white 16GB version.
"We are delighted to bring customers this ground-breaking mobile technology," Gary Severson, Wal-Mart senior vice president of entertainment, said in a statement. "Our electronics associates have been preparing for many weeks for the arrival of iPhone 3G."
And some of them let the cat out of the bag a little early, as CNET News' Marguerite Reardon noted several weeks ago.
The popular smartphones are currently available at Apple retail stores, AT&T stores, and at Best Buy, where the 8GB phone is sold for $199 and 16GB phones are sold for $299.
Wal-Mart's iPhone offering amounts to two dollars in savings and negates, for now anyway, the rumored 4GB model that some had speculated Wal-Mart would sell for $99.
Wal-Mart will be staffing Apple iPhone 3G kiosks located in the Wal-Mart Connection Center in the store's home entertainment department.
The iPhone is coming to Wal-Mart Stores, though when and for how much is still unclear.
(Credit:
Apple)
Four electronics department managers at Wal-Mart stores in Delaware, New Jersey, and New York said Monday that they were already training employees to sell Apple iPhones. Two department managers, who didn't want their names used in this story, said the phones are expected to go on sale on December 28. Bloomberg News reported Sunday that a Wal-Mart employee in Stockton, Calif., expects to start selling iPhones on December 15.
Department managers on the East Coast also said they expect to be selling both the 8GB and 16GB versions of the phone. But they said they hadn't been informed of pricing yet.
The phones are currently available at Apple retail stores, AT&T stores and in Best Buy retailers, where the 8GB phone is sold for $199 with a two-year AT&T service contract, and 16GB phones are sold for $299 with a two-year contract.
Rumors have been flying around the blogosphere that Apple will sell a special 4GB version of the iPhone at Wal-Mart stores for $99. A Wal-Mart employee at a store in Milpitas, Calif., told the San Jose Mercury News for a story published Saturday that she expects to sell a 4GB version of the phone.
None of the Wal-Mart employees on the East coast interviewed for this story had heard of a 4GB model. Apple actually stopped selling a 4GB model of the original iPhone in September 2007, just two months after the iPhone had launched, because CEO Steve Jobs said that people preferred versions with larger storage capacity.
Maynard Um, an equity research analyst at UBS said in a research note on Monday that it would be "atypical" for Apple to sell the phone at such a low price. Instead, the company would likely add Wal-Mart and possibly Sam's Club as another iPhone distributor.
The blog MacRumors is reporting that new Wal-Mart training materials and advertising for the iPhone indicate that Wal-Mart will sell the 8GB version of the iPhone for $197, $2 cheaper than the price tag offered at Apple, AT&T and Best Buy stores.
Representatives from Apple, AT&T, and Wal-Mart all declined to comment on this report.
The first-generation iPhone, which began selling in June 2007, was a hit. But the newer, faster 3G version has been even more popular. Much of this can be attributed to the new pricing. Apple has dropped the entry level price on this product from $399 to $199. In October, Jobs said the company had already reached its 2008 goal of selling 10 million iPhones.
Distribution through Wal-Mart, which is the largest discount retailer in the U.S., could help bring the iPhone to the masses. The chain will become only the second retailer to carry the phone. Apple struck a deal with retailer Best Buy in September. Before that, the phone was only available through Apple and AT&T stores.
Wal-Mart is already offering other hot mobile phones in its stores. Weeks after it was introduced, Wal-Mart began selling T-Mobile's G1, the first phone to use Google's Android mobile operating system. Wal-Mart has deeply discounted the G1, selling it for around $150, about $30 cheaper than T-Mobile's own price of $179.
After rumors surfaced last week regarding a $99 iPhone sold through retail giant Wal-Mart, Bloomberg has apparently partially confirmed the speculation, citing "two store representatives saying the world's largest retailer will carry two models of the Web-surfing handset this month."
The store will reportedly start selling iPhones on December 15, just in time for the holidays. No mention of a $99 model was made, with store representatives allegedly confirming only 8GB and 16GB models and the standard $199 and $299 prices, respectively.
Originally posted at iPhone Atlas.
It's just a rumor at this point, but the usual anonymous tipsters have told the Boy Genius Report that Apple is planning to sell a $99 iPhone at Wal-Mart. There's been some debate about whether this would be a good idea for Apple. One financial analyst ran the numbers and believes that Apple would double or triple sales while still maintaining very healthy margins of more than 40 percent. Other onlookers have noted that Apple does not typically play the low-cost high-volume game; it certainly made fools of any suckers who believed the $800 laptop rumor.
(Credit:
CNET Networks)
I'll throw my hat into the ring and say that a $99 iPhone would be a great idea. Why?
1. The smartphone market is new(er). Laptop computers have been around for more than a decade and have practically become a commodity, as evidenced by the recent rise of sub-$500 Netbooks. The typical way to compete in a commodity market is by ruthlessly slashing expenses and competing on price. But the better way--if you can swing it--is to break out of the commodity ghetto and position your product as a luxury exception. That's exactly what Apple has done, largely by way of design. (You can argue the merits of OS X versus Windows all you want, but there's no arguing that OS X has a simpler--not necessarily "easier"--and therefore more elegant appearance.)
But smartphones are still a relatively green market. Yes, we've seen "feature phones" capable of running simple applications like games for some time, but true smartphones--with large displays, sophisticated user interfaces, and the ability to run multiple types of computer-like applications--are still rare outside the business world. If Apple can compete aggressively on price now, it could dominate the consumer smartphone market, just as it dominates the MP3 player market today. Once that happens, all sorts of interesting long-term revenue possibilities open up--App Store revenue could become significant with 50 million iPhones out there, not to mention upgrade cycles, attached devices and services, and the "halo effect" on Apple's other products.
2. The competition is behind. As today's Gartner report on smartphones makes clear, the competition is in disarray. Nokia/Symbian's market share showed an annual decline for the first time ever in the third quarter because of a lack of competitive touch-screen devices. Windows Mobile fell behind the iPhone in North America. And while Research In Motion is also growing, its entrant in the touch-screen race, the new Storm, has been met with a decided "meh" or worse.
None of these competitors is standing still. Nokia's got its Ovi Internet services online and is unveiling touch-screen devices left and right; Microsoft's busy at work on Windows Mobile 7, which will almost certainly incorporate music functionality from the Zune and design and other features from Danger. And the Storm won't be RIM's last effort at a touch-screen phone.
3. The economy. Times are hard. Apple's got a backlog of 2 million iPhones in the channel, according to that Gartner report. RIM just downgraded expectations for its third quarter. What better way to dominate than by being the low-price leader and creating the product with the most mainstream appeal? It sure seems to be working well for Nintendo.
By striking now, the iPhone could become "everybody's" first smartphone. Five years from now, it could be as synonymous with smartphone as iPod is with MP3 player.
Apple could soon have another distribution channel for the iPhone: Wal-Mart.
(Credit: CNET)The largest retailer in the world could be getting the iPhone.
Wal-Mart won't have the iPhone at every location come the end of December, if a report from the Boy Genius Report is accurate. But Apple will have iPhones in 2,500 stores in the U.S. and an additional 69 Sam's Club warehouse stores on December 28, according to the report.
It's not clear what price will be charged for the iPhone inside Wal-Mart, but it would be hard to imagine Apple embracing the idea of significant discounts even though CEO Steve Jobs has talked of needing to stay aware of lower-priced competitors. Wal-Mart also offers T-Mobile's Android G1 phone, and though CNNMoney.com had reported that the famously low-price retailer would be offering the G1 for a $30 discount, a Wal-Mart store in San Leandro, Calif., was selling the G1 for the standard $179 on Wednesday morning.
Apple has shown a willingness to embrace the big-box types over the past few years. iPods can be found at retail stores across the country, and electronics behemoth Best Buy devotes significant space for all of Apple's major products inside many of its stores.
But what's surprising about this report is the timing, however: three days after Christmas? Perhaps Wal-Mart wouldn't have been able to get ready or train their staff in time for the holiday season, but with iPhone sales expected to decline slightly off last quarter's totals, you'd think Apple would have wanted a major distribution channel on line during the holiday rush.
See also:
• Sources: Apple, music labels talk DRM-free songs
The iTunes Store is still the top destination for U.S. music shoppers, according to new data.
(Credit: Apple)Apple is still the No. 1 music retailer in the United States, but Amazon.com's online store is coming on strong.
More U.S. music buyers are getting their music fix through iTunes than from any other source, according to data released on Tuesday by NPD Group. Earlier this year, Apple took over the top spot from Wal-Mart Stores, and it maintained that lead during the six months from January to June, NPD said.
Wal-Mart is still in second place, followed by Best Buy. Taking fourth place from Target was Amazon, whose own music store has been growing in popularity since it launched last September, perhaps in part due to its DRM-free stance.
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