Walmart Announces Permanent Price-Drops on iPhone 5 and 4S

by William White | June 24, 2013 1:48 pm

Wal-Mart WMT[1]Walmart (WMT[2]) lowered the price of Apple’s (AAPL[3]) iPhone 5 and iPhone 4S on Saturday.

The price drops (which are permanent) will take the iPhone 5 from $189 to $129 with contract and the iPhone 4S from $89 to $39, reports Mashable[4].

With the iPhone 5S scheduled for a September release[5], the price drops are likely part of the company’s efforts to reduce its inventory of the phones.

When a new product is released, older versions of the product see a huge decline in sales. Walmart has a limit as to how much markdown each store can have. This often leaves various Walmarts with overpriced items that are out of date and unlikely to sell. By doing a store-wide price drop like this, the company can remove the phones from its inventory before it gets to the point where the phones won’t sell, and instead take up inventory space that could be used by other products.

At the same time, this also puts pressure on its competitors. Other retailers will either have to match Walmart’s price drop or potentially lose customers.

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