Edible Apple

BoyGeniusReport is reporting that Apple is planning to offer a 4GB iPhone at Walmart for the low low price of $99.  Though nothing has officially been confirmed, previous reports have indicated that the iPhone would be available at select Walmart stores (around 2500 in total) by the end of December.

If true, this move could see a huge surge in sales for the iPhone.  Not only would the device become more accessible and visible to the public, but the pricepoint might be too low for customers to ignore.  Ever since the iPhone launched, analysts have noted that if Apple truly wants the iPhone to grow like the iPod, it would have to offer different models.  The problem is that no one wants an iPhone mini in the way that they wanted an iPod mini.  By choosing to differentiate its iPhone lineup by memory (if this rumor proves to be true),  Apple will be able to offer a cheaper iPhone model that won’t have consumers feeling that they’ve been ripped off.

But there are also more than enough reasons to be skeptical.  Technologizer has a few reasons why a $99 iPhone wouldn’t make sense for Apple.

For one thing, I’m not sure how well the math works: At the moment, an 8GB iPhone is $199 and a 16GB one is $299. That’s a $100 premium for an extra 8GB of memory, so it’s not clear that reducing the memory by 4GB would save Apple and Wal-Mart enough to slash the price of an entry-level iPhone by $100. And a $99 iPhone would be big news and a big hit–I have trouble believing that Apple would allow Wal-Mart to rack up all those sales and deny its own stores, AT&T ones, and Best Buy to get in on the action.

Then there’s the fact that a $99 4GB iPhone would represent a major cutback in the phone’s capability to hit a low price point. That’s certainly a Wal-Marty thing to do, but it sounds out of character for Apple, which stopped selling the 4GB iPhone (which originally sold for $499) as soon as it could.

Back in October, we also ran a piece arguing why there would never be a $99 iPhone.  Chief among our listed reasons was the fact that AT&T subsidizes each and every phone, and at $99, those subsidy’s would be too big for AT&T to stomach.  Could it be possible that Walmart and AT&T together are subsidizing the cost of the iPhone?

Price aside, it will be interesting to see the level of interest consumers have for a 4GB iPhone.  When first released, the 4GB model didn’t sell nearly as well as the 8GB model, and Apple soon discontinued it.  And also, 4GB isn’t a lot of memory if you’re planning to have some music, a few videos, and a few games on your phone.  Perhaps the $99 pricepoint is something of a trojan horse to get skeptical users on the iPhone bandwagon, and then have them upgrade to higher memory models sometime in the future.