Market Overview

Verizon to Clear Out iPhone 5 Inventory with $100 Discount

Is Verizon (NYSE: VZ) looking to clear out its iPhone 5 inventory?

According to Electronista, the mobile carrier plans to take $100 off the price later this month. With an estimated start date of mid-May, the price reduction could occur as soon as next week.

Electronista speculated that Verizon is trying to stay competitive with Sprint (NYSE: S) and T-Mobile (NYSE: TMUS), which have been running iPhone promotions of their own.

Sprint is currently taking $100 off the iPhone 5 for new customers switching from another carrier. T-Mobile is selling the iPhone 5 for just $99 down, though consumers will have to pay for the rest over a 24-month period.

Verizon may also be fearful of Apple's decision to sell the iPhone through U.S. Cellular (NYSE: USM), which will offer the device sometime this year.

That seems very unlikely, however. As the second company to carry the iPhone, Verizon has become the number-two player for Apple device sales. The carrier sold four million iPhones last quarter.

By comparison, Sprint sold 1.5 million units -- the same number of iPhones that it has sold for the last several quarters. T-Mobile only recently began to sell the iPhone, so its sales figures have yet to be reported.

Only AT&T (NYSE: T) was able to top Verizon, selling 4.8 million iPhones.

Thus, Verizon does not have very much to worry about -- except for a surplus of iPhone 5 stock.

Of the four million iPhones that were sold by the carrier, only half were said to be the iPhone 5. This means that older models (the iPhone 4 and iPhone 4S) are continuing to sell at a record-breaking pace even after the latest model arrived at retail.

If the iPhone 4 and iPhone 4S are more popular than the iPhone 5, retailers could have an inventory problem as the next iPhone approaches. Whether it's the iPhone 5S, iPhone 6 or some other smartphone, Apple is only a few months away from releasing an update.

By reducing the price, Verizon will be able to keep its competitors at bay while simultaneously depleting any overabundance of stock.

There is also the possibility that Verizon will simply reduce the price to increase sales at a time when it knows many consumers are waiting to see what Apple does next. Between the low-cost iPhone and the iPhone 5S, consumers have a lot to look forward to next quarter and beyond.

Perhaps that is the real reason why Verizon is expected to lower the price: to simply ensure that iPhone 5 sales remain consistent at a time when consumer interest is expected to shift to the next generation.

Louis Bedigian is the Senior Tech Analyst and Features Writer of Benzinga. You can reach him at 248-636-1322 or louis(at)benzingapro(dot)com. Follow him @LouisBedigianBZ

Posted-In: Apple iPhone 5 VerizonNews Rumors Tech Best of Benzinga

 

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