December 10, 2008

Walmart iPhone deal could be big for Apple

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If Walmart does sell a $99 iPhone Apple will find itself with a sales channel that equals its retail presence in short order.

In a research note, Piper Jaffray analyst Gene Munster ponders reports that Walmart will sell a $99 iPhone–most likely a 4GB version. Munster writes:

Our analysis begins with a simple count of 3,500 U.S. Walmart stores and 208 U.S. Apple retail stores. We are modeling for Apple to sell 45m iPhones in CY09; we assume that 30% (13.5m) are sold in the U.S., and one third of U.S. iPhones (4.5m) are sold at Apple retail stores. In other words, we believe the average Apple store will sell about 22k iPhones in CY09. In order for all 3,500 U.S. Walmart stores to sell as many iPhones as the Apple retail channel (4.5m), each store would need to sell 1,284 iPhones in CY09, or 6% of the total annual volume of each Apple retail store. We believe a Walmart store would likely sell a small fraction of the units that an Apple store would, but we also believe that 6% on a unit-basis is achievable. In other words, we believe Walmart could equal the U.S. Apple retail channel in terms of iPhone units in CY09.

Those numbers aside Munster doubts reports that Walmart will sell a $99 iPhone by the end of the year. He does expect Apple to expand the iPhone lineup with a lower-priced model–that could wind up at Walmart.


Source: ZD Net

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