How Soon Will the iPhone 5 Be Free?

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Wal-Mart Stores Inc. (NYSE: WMT) recently dropped the price of Apple Inc.’s (NASDAQ: AAPL) iPhone 5c to $29, as long as customers get a two-year contract from AT&T Inc. (NYSE: T) or Verizon Communications Inc. (NYSE: VZ). As the launch of the iPhone 6 approaches and the competition for smartphone market share rises, that price may be $0 before the end of spring. Apple’s iPhone, once the clear and outright leader in the smartphone industry, has lost much of the retail leverage it had when its products were considered revolutionary.

Granted, the iPhone 5c has fewer features than its stablemate iPhone 5s. However, the market for smartphones does not only include products that bristle with capabilities, which may run from complex navigation to high-end cameras. The iPhone 5c has an advance A6 chip, 10 hours of LTE browsing time and the ability to record video in 1080p HD. That is almost certainly enough for most people who want or need a smartphone.

Apple’s price challenges have been well articulated already. Each generation of iPhone seems to have fewer upgrades in features than the one before it. Introductions of new iPhones are no longer national events, watched by millions of people as Steve Jobs walked around a stage explaining the many benefits of the new product.

As such, the iPhone has become ordinary. Samsung makes as good a product, according to many expert surveys, and more importantly sales figures. Its new Galaxy 5 is expected to give the South Korean company a surge in sales. This smartphone will make it to market before the iPhone 6, which may soak up much of the demand for new smartphones, each generation of which appears on an every-year cycle. Apple no longer controls this cycle of upgrades. It is fortunate if it can catch Samsung’s new products with iPhones that reach the market a few months later.

The $29 iPhone is on the market now. Prices have continued to drop since the smartphone was first introduced. To clear inventory, the iPhone 5c will be free soon, and Apple products will have lost more of their luster.