Staggering, considering the Pixi arrived at market just four days ago, but perhaps necessary given early and widespread complaints about the device’s slow operating speed, some unfavorable reviews and the fact that the Pre–the Pixi’s more robust elder sibling–is now selling for $99.99 and $79.99 at Wal-Mart (WMT) and Amazon (AMZN), respectively.

UPDATE:

Palm’s aren’t the only smartphones being heavily discounted as we head into the holidays. Motorola’s and HTC’s are as well. Amazon is offering the Moto’s Droid for $149.99 and Overstock is peddling the HTC Eris for $49.99.

Which is saying something. Because as you might recall, in 1999, Nasdaq was soaring on the back of the dot-com bubble to levels never before seen.

And here we are amid the worst recession since the 1930s. Haven’t even entered that “all important holiday shopping season” yet, either.

Things are looking pretty good for Amazon (AMZN) right now. Sure, there’s renewed competition from retailers like Wal-Mart (WMT). There are potential sales tax issues and income tax liabilities and a raft of Kindle-killers headed to market. But Amazon’s stock is up 131 percent this year, brokerage firms are upgrading their ratings on the company, and analysts are saying it’s only going to go higher.

Said Citigroup analyst Mark Mahaney: “Near-term outlook very positive as AMZN heads into holiday season fully armed against shrinking/de-stocking offline retailers, with one of the must-have gadgets of the season (Kindle), a significantly strengthening International presence, and soon-to-be closed Zappos acquisition.”

Yeah. Things are looking pretty good right now. But we said that back in ‘99 too–when Amazon had a similar P/E.

“We believe Wal-Mart is actively pitching Apple to carry more products,” Reitzes said in a research note this morning. “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….Apple is very particular and exclusive with who sells its Macs and any ‘Mac experiment’ with Wal-Mart would likely start very gradually via a pilot program at first–just like Mac sales started at Best Buy….While we don’t expect an immediate impact this year and believe Apple would need to reposition its line-up first, we believe that closer ties to Wal-Mart makes sense.”

Indeed, Wal-Mart (WMT) could certainly bolster Apple’s (AAPL) distribution, particularly in areas without Apple Stores. A compelling proposition: broader access to the mass-market consumer without the infrastructure costs of a standalone boutique. And surely Apple has overcome its aversion to Wal-Mart now that the big-box retailer has been peddling its iPhones for so long.

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.”

Confirming earlier reports, the Mercury News says the world’s largest retailer will begin carrying two versions of Apple’s (AAPL) iconic handset later this month. “It’s going to be very soon,” a Wal-Mart store manager told The Merc. “Originally they were going to release it before Christmas, but they can’t get them that fast to us.” Presumably, the retailer will sell the same 8- and 16-gigabyte phones available at Apple and AT&T (T) stores at similar price points–$199 and $299, though there’s been speculation that it may sell a $99 4-gigabyte model, as well. At this point, that seems unlikely, though an iPhone at a price point like that would certainly help drive broader adoption. “The upscale market has already been addressed,” IDC analyst Shiv Bakhsh told the Merc. “Especially in a market that’s headed for a recession, you want to go to the places where people are still shopping, where they’re looking for deals.”

First, Best Buy. Now Wal-Mart. Can Costco be far off?

The deal is an interesting one, and for a number of reasons. Unlike Brooks–or The Eagles or Journey, who have similar pacts with Wal-mart–AC/DC is still under contract to Sony (SNE) BMG’s Columbia Records. By inking such a deal, Columbia almost certainly risks alienating other retailers, who can’t be happy to see AC/DC’s first album of all-new material in eight years become a Wal-Mart exclusive. Among those retailers: Apple’s (AAPL) iTunes Music Store, where AC/DC has so far refused to distribute its music.

The deal also comes at a time when Wal-Mart and other big retailers are reducing their CD shelf space. It’s been estimated that Wal-Mart, Circuit City (CC) and Target (TGT) have cut between 5 percent and 23 percent of their CD inventory in the last two years. Which means that retail exposure, which was once a given for many bands, is becoming increasingly dear. So much so that it’s a negotiating point, and–in Wal-Mart’s case–enough of one for big-name acts to justify allowing the retailer to sell their new releases on an exclusive basis.

“Shelf space has shrunk so much over the last five years that for anyone to give you shelf space and exposure is a big deal,” Terry McBride, chief executive of Nettwerk Music Group, recently told the New York Times. “Should the labels be worried? There’s been a move away from the labels for a number of years now. And it’s not necessarily their fault. The shelf space to have those records sell just isn’t there. That’s the market reality.”

1. iTunes
2. Wal-Mart (Wal-Mart, Walmart.com, Walmart Music Downloads)
3. Best Buy (Best Buy, Bestbuy.com, Best Buy Digital Music Store)
4. Amazon (Amazon.com, AmazonMP3.com)
5. Target (Target, Target.com)

NPD’s latest metrics, incidentally, also show Amazon MP3 rising to fourth place from fifth, and perhaps heading upward from there. “We expect Apple will consolidate its lead in the retail music market, as CD sales continue to slow,” said Russ Crupnick, entertainment industry analyst for NPD. “Amazon’s CD buyers tend to be older, so they haven’t abandoned the CD format to the extent seen in the average music buyer. Plus, Amazon’s successful introduction of its digital download store will help the company improve its position in the future.”

And no doubt improve Apple’s (AAPL) position as well. After all, how much digital music purchased on Amazon ultimately ends up on iPods?