Wal-Mart Stores (WMT) plans to sell the newest iterations of iPhones at a discount, a pricing strategy that Apple (AAPL) has managed to squash for years. The cheaper iPhone 5c will be sold at the world’s largest retailer for $79 along with a standard two-year service contract, 20 percent less than anywhere else in the U.S. The higher-end iPhone 5s will sell for $189, $10 cheaper than its typical sticker price with a service contract.
In the world of smartphone retail, this marks something of a breakthrough. Apple for decades has excelled at making sure the prices for its gadgets were as simple and as stripped down as the products themselves—a level of control achieved through a fairly aggressive combination of carrot and stick known as “price maintenance.”
Apple typically sets a minimum advertised price with retailers that isn’t a requirement but is a strong suggestion. The tech giant then promises to kick in a tidy financial incentive in the form of marketing dollars if the retailer keeps its gadget prices at that level or above. There have even been reports of Apple cutting off supplies to stores that strayed below the sticker-price threshold. The system ensures that small retailers won’t be undercut by big-box stores willing to squeeze margins or even take a loss. It also helps make sure every retailer is on a par with the prices in Apple’s own retail stores.
VIDEO: AT&T, T-Mobile Offer iPhone 5C No Money Down Deals