Market Overview

Wal-Mart Drops iPhone 5C, iPhone 5S Prices Ahead Of Launch (AAPL, WMT)

Hoping to gain an edge over the competition, Wal-Mart (NYSE: WMT) has reduced the price of Apple's (NASDAQ: AAPL) upcoming iPhones.

Available for pre-order this Friday, the iPhone 5C officially retails for $99 with a two-year contract. Wal-Mart will sell the 16GB model for $79. The retail giant has knocked $10 off the price of the 16GB iPhone 5S, bringing it down to $189.

According to CNET, the standard 16GB iPhone 5 can currently be purchased for $79. This deal will likely end the moment the iPhone 5C becomes available.

Wal-Mart is also selling the 8GB and 16GB iPhone 4S for $0.97. On September 16, the retailer will reduce the price of the iPhone 4 to just $0.10. Those who purchase the three-year-old handset will also get a $100 Wal-Mart gift card.

These discounts do not apply to those who purchase an iPhone 5S or iPhone 5C without a contract.

On September 14, Wal-Mart will reduce the price of the contract-free iPhone 5 (from $649 to $549) and the contract-free iPhone 4 (from $449 to $349). These prices are specific to Wal-Mart's Straight Talk prepaid plan.

Related: Apple's iPhone 5C Could Boost European Sales

Luring Customers Away

Best Buy (NYSE: BBY), Target (NYSE: TGT) and Apple's own outlets are among the top-selling retailers for iPhones. By offering the cheapest prices of any retailer, Wal-Mart is attempting to lure customers away from those stores.

This might work, but the gains could be short-lived.

When releasing a new product, Apple typically sends the largest shipments to its own retail locations. If 100 people show up at each Wal-Mart and the retailer only has 50 units to sell, half of its prospective customers are going to walk away disappointed. Next time, they might return to the Apple Store to increase their chances of scoring a new iDevice.

Wal-Mart must also deal with the challenge of customer loyalty. Some people simply prefer the Apple Store experience. Wal-Mart won't be able to persuade those customers to shift retailers unless it gives the phone away for free. Even then some people may not budge.

Disclosure: At the time of this writing, Louis Bedigian had no position in the equities mentioned in this report.

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

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