Walmart now offers iPhone 5 for $127, 4S for $47
Walmart is continuing to slash price tags on Apple products this holiday season, as the global retailer just announced it is now offering the 16GB iPhone 5 for $127.
Context & Ripple Effects
Walmart has been circling the iPhone since 2008, when it built an iPhone-compatible shopping site while the famous $99 iPhone deal ran through AT&T rather than the retailer itself ($99 iPhone). Four years on, the relationship has inverted: Walmart is now the most aggressive price-cutter in Apple's U.S. retail channel, dropping the 16GB iPhone 5 to $127 and the 4S to $47 for the holidays.
The timing matters because the discounts land against a nervous backdrop for Apple — the stock sits at a 10-month low on supply-chain and demand worries, and an analyst claim that Apple is trimming parts orders is circulating unconfirmed. Wide pickup by Reuters, CNET, ZDNet, The Verge and others shows how closely the market reads Walmart's shelf prices as a demand signal.
First-order effects
- Holiday shoppers can get the iPhone 5 for $127 on contract — $72 under the standard subsidized price — making Walmart the cheapest mainstream door to Apple's flagship phone right now.
- Walmart is treating the iPhone as a holiday traffic driver, accepting thin or negative hardware margin to pull buyers into stores during the peak shopping weeks.
Second-order effects
- Rival big-box retailers and regional carriers — some of which were already discounting the iPhone 5 at launch in September — face pressure to match or beat $127 or cede the holiday upgrade wave to Walmart.
- If the rumored parts-order cuts reflect real demand softness, aggressive channel discounting now does double duty for Apple: clearing inventory while risking a faster slide in perceived flagship pricing power.
Third-order effects
- Mass merchants are consolidating their role as the discount tier of smartphone distribution, with carriers' subsidy economics increasingly set by Walmart-style loss-leading rather than by the carriers themselves.
- For Apple, the pattern points toward a structural bargain: tolerate retailer-driven price erosion on older models to sustain unit volume, so long as the current-generation phone holds its premium.
The trend: Smartphone pricing power in the U.S. is migrating from carriers to mass-market retailers, which now use flagship iPhones as seasonal loss leaders.