UPDATE: Wal-Mart Stores Inc. (NYSE: WMT) and RadioShack Corp. (NYSE: RSH) said Friday afternoon that they would lower the price of the Apple iPhone 5c to $45. RadioShack, like Best Buy, will issue a $50 gift card and Wal-Mart will discount the price throughout the holiday season.
The list price of a 16-gigabyte iPhone 5c from Apple Inc. (NASDAQ: AAPL) is $99. Best Buy Co. Inc. (NYSE: BBY) is offering the 5c for $49 at its website. That’s an even steeper price drop than Wal-Mart Stores Inc. (NYSE: WMT) had at the iPhone 5c’s introduction.
The phone is advertised on the Best Buy website at $99.99 but require buyers to sign up for a 2-year contract in order to get a $50 gift card that you can apply immediately to the purchase price of the 5c. The iPhone 5s is not included in Best Buy’s offer.
The cost of manufacturing the 16-gigabyte 5c to Apple has been estimated at $173 by IHS, and the phone sells at retail for $549 without a contract. The more expensive 5s has been outselling the lower-priced model and one wonders if the price drop on the 5c is intended to push stock out the door.
Apple has discounted past iPhones within six months or so and could drop the price of the 5c to as little as $350 and still make a profit. It may move more quickly with the 5c now that it has established a premium price point for the product. Apple can maintain that premium image by pricing a lower-cost version of new iPhones relatively high at introduction and then dropping the price shortly thereafter to a very competitive level at which the company still makes a profit. This could also allow Apple to maintain a higher price for longer on the 5s.
Apple’s shares are down about 0.5% at $480.55 at noon Friday. The 52-week range is $385.10 to $666.00.