How Many iPhones Could Wal-Mart Sell? Well, That’s Obvious, Isn’t It?
by John Paczkowski
Posted on December 11, 2008 at 1:01 PM PT
Though Wal-Mart has made no official announcement regarding the reportedly imminent arrival of Apple’s (AAPL) iPhone on its shelves, it would seem that the big-box retailer will begin peddling the device before the year is out. If that’s the case, how many iPhones is Wal-Mart capable of selling?
The short, and obvious, answer to that question is “a hell of a lot.” In a note to clients today, Bernstein Research analyst Toni Sacconaghi argues that Wal-Mart (WMT) can sell between 800,000 and 1.3 million iPhones in 2009, though the retailer’s low price mantra may appear inconsistent with the iPhone’s market positioning. And that would seem to be a reasonable estimate. After all, Wal-Mart has some 2,500 retail outlets in the states, through which 100 million customers stream each week.
“The addition of Wal-Mart will roughly double the iPhone’s distribution in the US to nearly 6,000 outlets,” Sacconaghi writes. “We believe iPhone sales will benefit from the added distribution, though not proportionately; in our view, price (for both the device and service plan) is still the biggest hurdle to mass adoption…. With the iPhone already available at 3,000 Apple, AT&T (T), and Best Buy (BBY) stores, Wal-Mart likely does little to expand the device’s geographic reach. However, we believe Wal-Mart will have a greater impact on the iPhone’s demographic reach in terms of raising awareness and availability among lower-end consumers who are less likely to shop at the Apple Stores or BestBuy.”
One last point worth noting here, Sacconaghi puts little faith in rumors that Wal-Mart will offer a $99 4GB iPhone. “Could there be a cheaper iPhone at Wal-Mart,” he writes. “We think it unlikely, at least initially, but the idea is not completely unfounded. In our view, a $99 price point for the iPhone seems too low, but some modest discount is not implausible.”
Comments
It’s all about getting that user base. Apple is smart selling at next to cost. They’ll make back the money once the user base is established. All about gaining market share.
Posted by Mark Light at December 11th, 2008 at 1:49 pmJournalism 101: do some research and don’t be afraid to use facts in your article.
for example, did you know that 100 million Americans shop at Walmart EVERY WEEK?
Posted by Sam Harrison at December 12th, 2008 at 1:05 pm