iPhone maker Apple Inc. (AAPL) is a stock synonymous with exclusivity, from its closely controlled smartphone and iPad operating systems to Steve Jobs and his top secret electronics production plans. So it’ssurprising that when the Apple iPhone 4 hits stores on June 24, Walmart (WMT) will be stocking the smartphone on its shelves at the exact moment the company’s namesake Apple Stores will be making them available to the public.
The iPhone 4 launch could prove very valuable as Apple Inc. looks to fend off a line of rival smartphones powered by the Google (GOOG) Android operating system. Rolling out its launch on a huge scale by including Walmart stores ensures Apple will make sure no customer misses out on the iPhone because they couldn’t find one on sale nearby.
This move could be part of a huge shift for Apple, which has always taken great pains to manufacture a hip, independent corporate image. But the reality is that smartphones are a consumer norm instead of a cutting edge product for techies, and Walmart is the single biggest way to get the new Apple gadget to the masses.
And the Walmart-iPhone deal is not just a first for Apple — it’s a first for any major tech company that has partnered with the retail giant. Normally there is some type of built-in dark time before the hottest electronics are distributed to WMT stores, but this same-day launch is the earliest release for a computer or phone at the big box store.
Some think Apple’s image may take a hit by taking some of the magic out of its product launch and removing a layer of exclusivity that Apple fans have come to expect. That’s not very likely, however, seeing as this is the fourth incarnation of the iPhone so a bit of bloom is off the rose. Besides, it’s not like the iPhone is going to be cheaper at Walmart, so customers don’t have to worry that they’re buying a cheap “discount” smartphone.
And though margins may be thin for Walmart, chances are the store will win out even if the profit per iPhone isn’t that impressive. That’s because most iPhone customers snatch up more than just a handset with big accessory purchases like extra batteries, cases and more. These type of add-ons will offset any thin margins at Walmart. Not to mention the fact that Walmart has thousands of other items on sale that an iPhone shopper could pick up on their way out of the store.
The only real question is whether the demand will be as strong for this launch as Apple expects, and whether they will have enough iPhone 4 handsets to cover the sales. Reports indicate Apple has been ordering up parts needed to produce iPhones at a rate of roughly 3 million per month.
The campaign also could usher in a new era for Walmart, where tech companies tap into the company’s global reach to improve sales at launch. If other companies follow Apple’s lead with a same-day launch, the king of retail could see itself emerge as a leading partner in product launches instead of just marching two steps behind.
As of this writing, Jeff Reeves did not own a position in any of the stocks mentioned here.
