Wal-Mart drops iPhone 5C price to $27

Wal-Mart will place Apple’s iPhone 5C on a steep discount beginning Friday and through Christmas Eve, in an apparent effort to reduce inventory of a device that has generally disappointed analysts since it reached the market in September.

The phone will be available for a mere $27 with a two-year contract with AT&T or Verizon, according to a press release. Apple’s original price had been $99. Wal-Mart, along with other retailers, had already discounted the price to $45 in October. At that time, a spokeswoman had told ABC that the price would not be reduced again for the holidays.

Apple released the phone along with the more expensive iPhone 5S. Analysts had expected Apple to offer the 5C at a price that would attract buyers who are younger, less affluent, or living in developing economies. As the market for more expensive phones saturates, companies like Samsung that make cheaper phones have been expanding their share of the market at Apple’s expense.

Yet the iPhone 5C’s original price of $99 (or $549 without a contract, as most overseas customers would pay), has been seen as too expensive for new the new group of customers. Retailers lowered their prices, and according to one report, Apple reduced its order for the model at Taiwanese assembly plants.

Apple CEO Tim Cook said that the 5C had never been intended for new buyers, who he believes will be satisfied with iPhone 4S, an older model, but as Brian Fung noted, that explanation did not clarify Apple’s goals in designing the 5C.

As cheaper models become available and smartphones change from a luxury good into a popular commodity, the market is shifting in the same way that the market for personal computers did 20 years ago, writes Neil Irwin. Apple, which excels in providing high-quality products to discerning consumers, struggled during that transition as well, Irwin writes.

For now, though, Apple’s phone business is still doing very well in general. Sales of the more expensive iPhone 5S have exceeded analysts’ expectations, and the company exhausted its initial supply of the phone almost immediately.

Wal-Mart will also place the 5S on sale. The device will be available for $127 with a contract, a more moderate discount from Apple’s original price of $199. Other items on sale include Apple’s iPad Mini.

Max Ehrenfreund is a blogger on the Financial desk and writes for Know More and Wonkblog.
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